AB Fashion, AB Lifestyle Target Price Indicate Strong Upside; Time To Take Risks, Says Morgan Stanley

Morgan Stanley said AB Lifestyle is a defensive counter. The company has a good mix of core lifestyle brands and younger brands (especially Reebok) that offer potential for growth.

"Overall, we expect it to deliver a 10% revenue CAGR, FY25-28 estimate, with gradual improvement in its margins and return profile. The stock trades at 13 times F727 estimates EV/Ebitda, with an opportunity for multiple expansion upon consistent execution delivery," the note said.

Aditya Birla Fashion is prime for a valuation re-rating as the risk-reward is attractive, according to Morgan Stanley. The company is a good play on India’s fast-growing luxury market via its designer-led ethnic and luxury businesses.

"Overall, we forecast ABFRL to deliver 14% revenue and 27% Ebitda CAGR between FY25 and FY28 and think it is well capitalised to fund its growth plans. Given its track record, investors have limited confidence in the stock, as 80% of the sell-side have UW/EW ratings," the note said.