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Systematix Research Report
Aditya Birla Fashion and Retail Ltd. added another set of brands to its burgeoning portfolio of fashion brands. It announced the acquisition of TCNS Clothing Co Ltd. with the intention of building a comprehensive ethnic wear portfolio by filling the big product gap it had in premium women's ethnic wear.
This would give Aditya Birla Fashion access to high potential brands like W and Aurelia to complement Tasva, its men's ethnic wear brand as it seeks to build a Rs 50 billion ethnic wear portfolio by FY27E with all these three brands having potential to cross Rs 10 billion each by that time.
The management views this as a rare opportunity to acquire a strong premium brand portfolio with a motivated team and strong execution capabilities at a reasonable valuation going through a difficult period since the pandemic started which seems transient.
They see multiple synergies with TCNS Clothing and exuded confidence on three fronts – driving 20% plus revenue compound annual growth rate to reach Rs 25 billion top line by FY27E, getting back to double-digit margins in two-three years and improve the working capital cycle.
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