Aditya Birla Lifestyle Brands Ltd. and Aditya Birla Fashion and Retail Ltd. have been given an 'overweight' recommendation by multinational investment firm Morgan Stanley with a highly bullish target price.
The brokerage upgraded AB Fashion to 'overweight' from 'equal-weight' and initiated 'overweight' on AB Lifestyle.
Analysts said the de-merger of Aditya Birla Fashion in May 2025 created two separate businesses suitable for different investment styles. ABFRL is a portfolio of growth businesses offering higher growth potential but higher execution risk. Aditya Birla Lifestyle is a steady business with lower risk and hence, lower reward.
Aditya Birla Lifestyle
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.
AB Fashion
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.
Target Price
Aditya Birla Fashion – Target price at Rs 131, implying a 53% potential upside over the previous close.
Aditya Birla Lifestyle – Target price at Rs 175, a 23% potential upside.
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