Aditya Birla Fashion Q3 Results Review - Improved Operating Performance: Motilal Oswal

Motilal Oswal Report

Aditya Birla Fashion and Retail Ltd.’s consolidated Ebitda grew 27% YoY (19% beat) to Rs 5.5 billion in Q3 FY24, led by healthy revenue growth of 16% (aided by TCNS Clothing Co. Ltd. revenues). Ebitda margin expanded 120 basis points which was driven by gross margin expansion of 190 bp YoY.

Net loss, however, widened to Rs 1.1 billion (versus estimated loss of Rs 514 million), dragged down by higher depreciation and finance costs as a result of strong store expansion.

A gradual revival in Pantaloons and the discontinuation of unprofitable channels in Madura turned out to be positive. However, continued investments in new businesses (Tasva and TMRW) and the streamlining of inventory in TCNS could put pressure on earnings for the next four-six quarters.

We build in a compound annual growth rate of 13%/9% in revenue/Ebitda over FY23-25E. Retain Neutral rating.

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