Aditya Birla Fashion and Retail Ltd. share price target

Aditya Birla Fashion & Retail (ABFRL) reported 55% YoY drop in revenue to INR 1,028 crore

We cut our revenue estimates by 13%/4% and EBITDA estimates by 38%/7% for FY21E/FY22E due to sluggish recovery in the Apparel category, factoring in FY22E revenue/EBITDA 10% below FY20 levels. Nevertheless, strong...

Aditya Birla Fashion and Retail (ABFRL) has announced fund raising of INR 1,500 crore via preferential issue to Flipkart group's investment vehicle - Flipkart Investments Private Limited (FIPL).

Revenue from Lifestyle brands de-grew 81% YoY to | 190.0 crore. It reached 30% of pre-Covid sales in June (LTL: 50%). Aligning with the current demand scenario, it tweaked its product portfolio by launch of work from home collections, merchandise focused on around health & safety and protective masks (~50 lakh branded masks sold). The company fortified its digital presence as sales in June from e-commerce channel grew 166% YoY (share of e-commerce rose to 21% in Q1FY21 vs. 6%). Revenue from other business (that includes innerwear & athleisure) de-grew 77% YoY to | 47.0...

Yet, the ABFRL stock is down 53% (decline much higher than other retailers) from its peak in Feb20, which could largely be pinned on its high leverage. Our broad workings indicate that at revenue of INR60b, ABFRL would reach EBITDA break-even on the back of 50% gross margin and 25% reduction in existing operating cost of IN40b in FY21. Our expectation of ~20-25% operating cost reduction is achievable as (a) rental cost negotiations with landlords are on with good success, especially as some high street properties have already granted rental waivers for the lockdown period and lowered rent for FY21, (b) employee cost could be reduced across the front end, factory and head office with savings from variable pay, repositioning of employees to other verticals and some natural churn, (c) SG&A; may see >25% savings coming from multiple discretionary and non-core variable costs, including traveling, training, etc.

Despite the novel coronavirus or COVID-19, led lockdown, Aditya Birla Fashion & Retail (ABFRL) reported a 4.3% YoY drop in revenue

Revenue from lifestyle brands de-grew 5% YoY to | 1072.0 crore in Q4FY20. The division continued its healthy growth momentum in January-February with revenue growth of 7% YoY (LTL: 10%) but a weak March derailed trajectory. EBITDA fell 61% YoY to | 66.0 crore. ABFRL capitalised its own retail channel to fuel growth by adding record number of stores in FY20 (273 stores) taking total count to 2253 stores. Revenue for FY20 grew 7% YoY (YTD-February: 11%). ABFRL has aggressively rolled out Peter England...

28 May 2020 Revenue decline of 5% was in-line, while EBITDA loss of INR569m was a big miss v/s the expectation of INR736m in profit. This was due to a lower-than- expected reduction in fixed cost during the COVID-19 lockdown in Mar20. We cut our revenue by 9%/11% in FY21E/FY22E, building the impact of the extended lockdown and its repercussion on the slow-moving Apparel industry. Expect revival in FY22E, with EBITDA of INR6.3b, 35% growth over FY20. Revenue was down 5.1% YoY to INR18.2b (in-line) as operations were impacted due to COVID-19. Management indicated that normalized growth without the COVID-19 impact would be 13% YoY. The gross margin shrank 180bp YoY to 51.3% (220bp miss); EBITDA (pre-Ind- AS 116) turned to loss of INR569m (v/s expectation of INR736m and INR1.3b in 4QFY19). Normalized EBITDA without the COVID-19 impact should increase 1% YoY. PBT too turned to loss of INR1.