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

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.

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.

• 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.