Brokerages Bullish on ABFRL: Why Analysts See Potential ?

Brokerages are feeling positive about Aditya Birla Fashion & Retail (ABFRL) following the company’s improved performance in the January-March quarter (Q4FY24), despite seeing larger net losses.

Stock Performance

  • 2024 Growth: ABFRL’s stock has increased by over 27% this year, outperforming the 5% rise of the benchmark Nifty 50 index.
  • 52-Week High: Shares reached a 52-week high of Rs 297 each on May 28, 2024.

Analyst Ratings

  • Morgan Stanley: Rated ABFRL as ‘underweight’ with a target price of Rs 200 per share. They noted the company’s focus on improving profitability even in a weak demand environment. ABFRL’s Q4 earnings exceeded expectations due to better-than-expected EBITDA margins. The management worked on optimizing the retail network and expanding new businesses, and also met its FY24 net debt target.
  • Motilal Oswal: Gave a ‘neutral’ rating, highlighting that Pantaloons and Lifestyle segments drove profitability in Q4.

Financial Results

  • Net Loss: Increased to Rs 266 crore in Q4FY24 from Rs 194 crore in the same period last year.
  • Revenue: Grew by 18% year-on-year to Rs 3,406 crore.

Segment Performance

  • Madura Fashion & Lifestyle: Generated Rs 1,861 crore in revenue.
  • Pantaloons: Achieved Rs 895 crore in revenue.
  • Ethnic and Other Businesses: Posted Rs 712 crore in revenue, helped by higher same-store sales, network expansion, and category extensions.

Recent Developments

The company announced the demerger of its Madura business into a new, separately listed entity called Aditya Birla Lifestyle Brands. This move aims to focus on specific growth areas and maximize shareholder returns.


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