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Motilal Oswal Report
Aditya Birla Fashion and Retail Ltd. acquired Reebok India's current business and exclusive licensing rights for an investment of just Rs 750 million– Rs 1 billion. Reebok India has a steady revenue/Ebitda of Rs 4.3 billion/Rs 721 million.
In our view, this is a highly value-accretive deal – Aditya Birla Fashion has acquired a strong and established Indian brand, with high visibility, for a very low upfront payment.
Sportswear is the fastest growing category in the footwear market and has seen peers growing to two to three times Reebok India's size over the last few years – this underscores high growth opportunity.
FY20 Ebitda of Rs 721 million (for Reebok India) is just 4% of Aditya Birla Fashion's estimated FY23E Ebitda. However, it could add incremental value of 8–10%, with scope in athleisure, among others.
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