Aditya Birla Fashion Demerger on May 22; Check Projected Value, Key Brands like Louis Philippe, Van Heusen....

Aditya Birla Fashion and Retail Ltd (ABFRL), one of India's leading branded apparel companies has confirmed the demerger of its lifestyle division into a separate entity. The record date for this corporate restructuring has been set for Thursday, 22 May.

Shareholders who hold shares in Aditya Birla Fashion at the close of trading on Wednesday will be entitled to receive shares in the newly demerged company. Each eligible shareholder will receive one share in the new entity, Aditya Birla Lifestyle Brands Ltd, for every share they currently own in Aditya Birla Fashion.

What Will the New Entity Include?

The newly demerged company, Aditya Birla Lifestyle Brands Ltd, will encompass the group's established western wear brands, as well as high-growth labels such as Reebok, American Eagle, and Van Heusen Innerwear.

It will also house premium and iconic fashion brands including Louis Philippe, Peter England, Allen Solly, Forever 21, Van Heusen, House of Masaba, Sabyasachi, Fred Perry, Hackett London, Jaypore, Pantaloons, Ralph Lauren, Simon Carter, Tasva, Ted Baker, and The Collective.

It will also absorb the brands currently housed under Madura Fashion & Lifestyle.

Notably, the lifestyle segment accounts for around 85% of the group's total revenue. The publicly listed company, Aditya Birla Fashion and Retail Ltd, will continue to hold ownership of other key business divisions. These include Pantaloons, ethnic wear brands under TCNS Clothing, designer labels such as Sabyasachi, Tarun Tahiliani, Masaba, and Shantanu & Nikhil, as well as premium and luxury brands like Tasva and Jaypore. Additionally, it will retain control of its luxury multi-brand retail ventures, including The Collective and the forthcoming Galeries Lafayette India.

The management of Aditya Birla Lifestyle Brands Ltd has set an ambitious target, aiming for a Compound Annual Growth Rate (CAGR) in revenue of approximately 13% from FY2025 to FY2030.

They also expect to improve their EBITDA margin by around 300 basis points, reaching 11% by FY2030. Additionally, they are aiming for a Return on Capital Employed (RoCE)-excluding intangibles-of more than 70% by the end of the same period.

Meanwhile, the leadership of the listed Aditya Birla Fashion and Retail entity is projecting a 20% CAGR in revenue over FY2025-2030. They also anticipate a turnaround in profitability, expecting to post a positive EBITDA margin of 7% by FY2030, compared to the current negative margin. Their RoCE is forecasted to exceed 18% by the end of FY2030.

Brokerage's Rating on Aditya Birla Lifestyle Brand

Brokerage house Bernstein has provided a fair value estimate for the demerged entity, Aditya Birla Lifestyle Brands Ltd, in the range of Rs 185 to Rs 215 per share. For the post-demerger listed entity, the projected fair value is expected to be in the range of Rs 80 to Rs 105 per share.