Stay 'Neutral' On Aditya Birla Fashion Shares Maintains Motilal Oswal — Check Target Price

After the recent fund raise, debt-related concerns have been addressed, and Aditya Birla Fashion's management has indicated that focus would be on turning around the existing formats, rather than acquisitions. Growth recovery in Pantaloons and profitable scale-up of value fashion and branded ethnic wear, along with a turnaround in TMRW, remain key mediumterm monitorables..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Aditya Birla Fashion and Retail Ltd. provides a diversified play across several high-growth segments in apparel retail, such as ethnic wear, D2C online-first brands, and luxury retail. However, over the last few years, Aditya Birla Fashion’s profitability and valuations have been hurt by investments in several businesses, which are currently in the build-out/ turnaround phase and are loss-making.After the recent fund raise, debt-related concerns have been addressed, and management has indicated that focus would be on turning around the existing formats, rather than acquisitions. Growth recovery in Pantaloons and profitable scale-up of value fashion and branded ethnic wear, along with a turnaround in TMRW, remain key mediumterm monitorables. We raise our FY26-27E revenue by 5-8%, driven by higher growth in TMRW (potential consolidation of Wrogn), luxury retail, and OWND!. Our FY26/27E Ebitda increases 12%/26%, driven by margin improvement in Pantaloons and Luxury Retail. However, we expect Aditya Birla Fashion to remain in losses over FY25-28, due to the drag from TMRW..We value Aditya Birla Fashion on an SOTP basis. We assign an EV/Ebitda multiple of 11x/12.5x to Pantaloons (inc. OWND!) and a designer-led ethnic portfolio. We ascribe EV/sales multiples of 0.9x/0.75x/1.5x to Aditya Birla Fashion’s premium ethnic/ TMRW/Luxury Retail portfolio to arrive at our target price of Rs 100. Aditya Birla Fashion’s valuations at ~1.5x FY27E EV/sales and ~14.3x FY27E reported EV/Ebitda optically look undemanding. However, we note that attributable sales for Aditya Birla Fashion are slightly lower, as the company does not own a 100% stake in several brands. Further, we expect Aditya Birla Fashion to remain in operating losses, when adjusted for rentals, until FY27 at the least. We reiterate our Neutral rating on Aditya Birla Fashion as we await improvement in execution towards consistent growth and sustained profitability before we turn more constructive on the stock..Click on the attachment to read the full report:.Sri Lotus Developers Shares To Rise 35%? Motilal Oswal Initiates 'Buy' — Details Inside.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Stay 'Neutral' On Aditya Birla Fashion Shares Maintains Motilal Oswal — Check Target Price

Motilal Oswal retains Neutral rating on Aditya Birla Fashion as it awaits improvement in execution towards consistent growth, sustained profitability before turning more constructive on the stock.

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