Aditya Birla Fashion and Retail Ltd. share price target

PAT driven by margin improvement: ABFRL delivered a stellar 1QFY20 performance, with EBITDA increasing by 25% YoY to INR1.4b (5% beat) led by 8% YoY revenue growth. Lifestyle/Pantaloons reported healthy EBITDA growth of 22%/12% YoY, with a margin improvement of 120bp/20bp YoY (largely as the overall gross margin expanded by 220bp YoY). PAT adjusted for Ind-AS 116 stood at INR216m, implying a jump of 4x YoY, led by higher...

Post the subdued Q4FY19 results, ABFRL has bounced back with strong operating performance across segments in Q1FY20.

ABFRL has a strong presence in the menswear segment (formal and casual wear). However, ABFRL does not have a foothold in the Indian ethnic wear segment, which is growing in mid-teens. To strengthen its presence in the ethnic wear segment, ABFRL in the last month has done an acquisition of...

Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe, Peter England) reported healthy revenue growth of 12% YoY to | 1132 crore, driven by SSSG of 6% and robust 53% growth in e-commerce space. Due to a significant increase in marketing spends (up by ~| 42 crore), EBITDA margins for the division declined 143 bps YoY to 14.9%. For FY19, lifestyle division achieved healthy revenue growth of 11% YoY to | 4304 crore. The growth was fuelled by aggressive store additions (added 167 stores to 1980) and decent SSSG of 5.3%. With enhanced brand visibility owing to...

businesses. EBITDA declined steeply by 24% YoY to INR1.2b owing to (a) the rise in marketing spends, particularly in Lifestyle, (b) high employee cost attributed to the commencement of a new facility, (c) inventory write-down of INR100m in Pantaloons and (d) higher spend toward women's innerwear launch. Adjusted for the INR1.9b DTA impact, PAT stood at INR87m (-80%...

After 5 quarters of good results, ABFRL has reported a poor quarter. Revenues grew 9% to INR 1915 Cr and were broadly in line with estimates.

Higher other income (up 91% YoY to | 13.3 crore) further boosted PAT growth. Subsequently, PAT for the quarter doubled to | 70.2 crore (Idirect estimate: | 55.0 crore) Pantaloons delivers impressive performance After moderate revenue growth in H1FY19 (9% YoY), the revenue trajectory for Pantaloons accelerated at a swift pace with growth of 28% YoY to | 961 crore in Q3FY19. A healthy festive season coupled with aggressive investment in marketing spends (3x higher marketing spends) led to robust LTL sales growth of 17% YoY. EBITDA margin for the...

ABFRL has reported good numbers for 5 consecutive quarters now. Sales at INR 2,282 cr grew by 23% YoY and ~6% above our estimates.

ICICI Securities Ltd | Retail Equity Research We recently met the management of Aditya Birla Fashion & Retail (ABFRL). The key takeaways are: -i) festive period sales have been strong across all formats, ii) anticipates Pantaloons to report healthier revenue growth in H2FY19 owing to a shift in the festive season, iii) lifestyle brands are expected to maintain healthy growth momentum with early double digit SSSG in FY19E, iv) innerwear business growing at a rapid pace and currently has ~10,000 point of sales and v) would go slow in...

ICICI Securities Ltd | Retail Equity Research Despite a delayed festive season, ABFRL reported healthy topline growth of 11% YoY to | 2007.3 crore (I-direct estimate: | 1961.1 crore) EBITDA margins for the quarter improved 190 bps YoY to 7.1% (Idirect estimate: 6.6%) owing to a decline in other expenses as a percentage to sales by 210 bps YoY Higher other income (up 167% YoY to | 18.7 crore) further boosted PAT growth. Subsequently, PAT for the quarter came in at | 42.7 crore vs. net loss of | 10.0 crore in Q2FY18...