Aditya Birla Fashion and Retail Ltd. share price target

Aditya Birla Fashion & Retail Ltd Q2FY19 results Comment Revenue rose by 4.9% to Rs. 2007.34 Cr in Q2FY19 when compared to the previous quarter. Also, it grew by 11.24% when compared with Q2FY18.

ABFRL has reported good numbers for 4 consecutive quarters. Sales at INR 2,006 cr grew by 11% YoY in line with estimates.

We do not want to let go the opportunity of having a very large business in the future was the key message delivered by ABFRL's management in recent investor meetings. A lot of the strategic initiatives in recent times were towards this end, e.g. the reduction in product prices at Pantaloons' stores in recent years was not to do with competition in the space but aimed more at bringing affordability to a level that would allow the format to travel to 250+ towns vs just the top-20 cities that it would otherwise have been confined to. We find the narrative extremely compelling for the longer term, and management's steadfast focus on cashgeneration and return-ratio (targeting 18-20% ROCE for Pantaloons in the next 3 years)...

ABFRL has reported strong numbers for 3 consecutive quarters after another set of good results in Q1FY19.

Revenue grew by 9.12% to Rs. 1913.52 Cr in Q1FY19 when compared to the previous quarter. Aditya Birla Fashion & Retail Ltd Q1FY19 results Comment

ICICI Securities Ltd | Retail Equity Research Despite a strong base quarter (in Q1 ABFRL reported 25% revenue growth due to advancement of EOSS), ABFRL reported healthy topline growth of 9% YoY to | 1913.5 crore (I-direct estimate: | 1857.0 crore) EBITDA margins for the quarter improved 180 bps YoY to 6.0% (Idirect estimate: 7.0%) owing to a decline in rental expenses as a percentage of sales by 230 bps YoY and decline in other expenses as a percentage of sales by 60 bps YoY Driven by a strong operational performance, PAT for the quarter came...

In this quarter, in spite of demand being weak in January and February, branded apparel players have reported robust margin...

EBITDA margins for the quarter improved 220 bps YoY to 9.3% (Idirect estimate: 7.5%) owing to a decline in rental expenses by 8% YoY to | 254 crore and fall in other expenses and employee expenses as a percentage to sales by 120 bps and 20 bps, respectively In Q4FY18, it recognized deferred tax assets worth | 68.8 crore. Hence, PAT was at | 114 crore vs. | 22 crore in Q4FY17. Adjusting for it, PAT grew 2.0x to | 44.2 crore (I-direct estimate: | 30 crore) The board has approved raising of funds to raise equity up to | 1000 crore, mainly to further strength the balance sheet...

ICICI Securities Ltd | Retail Equity Research Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe and Peter England) reported steady revenue growth of 8.2% YoY to | 983 crore with LTL sales growth coming at 4%. Despite part shift of festive season to Q2FY18, stronger wedding season (Q3FY17 was impacted on account of demonetisation) shored up the revenue growth. Revenues from the wholesale channels (35% of sales) witnessed gradual green shoots as it reported healthy revenue growth of 17% YoY to | 343 crore....

We have been wrong on ABFRL over the past few quarters with the company underperforming our estimates and therefore the broader markets. This has been on account of multiple unforseen...