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Motilal Oswal Report
Consistent revenue growth and steady margin expansion in Pantaloons with the refreshed brand identity, along with loss reduction in TCNS and scale-up of TASVA/OWND, remain the key long-term catalysts for Aditya Birla Fashion and Retail Ltd.
However, higher investments and/or slower profitability ramp-up in some of the currently loss-making businesses could remain a key drag on overall profitability and cash flows for Aditya Birla Fashion.
Motilal Oswal has tweaked its estimates for FY26 actuals and model a compound annual growth rate of ~13%/ 25% in revenue/reported Ebitda over FY26-28E, though it does not expect Aditya Biral Fashion to achieve pre-IND AS Ebitda breakeven by FY28.
The brokerage values the company on an SoTP basis and assigns an EV/Ebitda multiple of 9x to Pantaloons (inc. OWND!), and 13x to the designer-led ethnic portfolio.
The brokerage also ascribes EV/sales multiple of 1x/0.9x/1.5x to Aditya Birla Fashion's attributable stakes in premium ethnic/TMRW/Luxury Retail portfolio to arrive at a revised target price of Rs 65 (earlier Rs 70). The cut in TP is largely attributed to higher net debt. Motilal Oswal reiterate Neutral stance of Aditya Birla Fashion.
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