Motilal Oswal Bets On This Retail Sector Stock For Potential 29% Gain, Target Price 380

Aditya Birla Fashion and Retail Stock Outlook

The current market price of the stock is Rs 297 apiece with a gain of 1.35 in trading so far today till afternoon. According to Motilal Oswal, if you buy the stock now, it has the potential to surge to Rs 380 with a return of 29%.

Aditya Birla Fashion and Retail Return In 5 Years

The stock has given a return of 76% in 5 years, 57% in 3 years, and 50% in 1 year.

Aditya Birla Fashion and Retail 52 Week/Low

The stock's 52-week high is quoted at Rs 321 apiece and 52-week low is 195 apiece, respectively.

Aditya Birla Fashion and Retail Market Capitalization

The company has a market capitalization of Rs 27,938.13 crore at the time of writing the story.

Aditya Birla Fashion and Retail Financial Performance

Hit by the second COVID wave, consolidated revenue recovered, yet remained 7% below pre-COVID levels (FY20). EBITDA margin remained stable at 13.5% on strong cost control. On a pre-Ind AS 116, EBITDA margin was 2.2% v/s 5.1% in FY20. Revenue from the Lifestyle segment remained resilient, reaching pre-COVID levels (ASP/volumes at 5%/-7%). Revenue from Pantaloons stood 25% below pre-COVID levels (ASP/volume at +9/-32%) as its large format stores and its higher presence in malls was severely affected by the COVID-19 pandemic. EBITDA contribution from Ethnic Wear and Other segments grew to 4% from -5%, led by a recovery in Fast Fashion, Innerwear, and its recent Ethnic Wear foray.

Aditya Birla Fashion and Retail Multiple Growth Categories

The management highlighted new growth prospects in the industry - Ethnic Wear, Athleisure, D2C, and opportunities in small towns, with online expected to constitute 20% of the total market by CY25. It is creating deep inroads into each of these categories, thus offering multiyear growth prospects, by leveraging: a) a host of in-house prominent brands, b) a deep Retail network, c) the inorganic route, and d) its proven execution capability, as evident from its market leading position across multiple formats.

Aditya Birla Fashion and Retail Valuation

According to Motilal Oswal, "We value ABFRL on a SoTP basis to arrive at our TP of INR380, assigning an EV/EBITDA ratio of 20x to the Lifestyle brands, given the strong recovery and improved profitability; 17x to Pantaloons; and an EV/sales ratio of 1x to Other businesses on a FY24E basis. On a pre-Ind AS 116 EBITDA of INR10.6b for FY24E, this works out to be EV/EBITDA of ~34x. An improved Balance Sheet, healthy cash flows, and a strong overall performance remain key tailwinds for the stock to perform going forward. We maintain our Buy rating."

Aditya Birla Fashion and Retail About

Aditya Birla Fashion and Retail Ltd. (ABFRL) emerged after the consolidation of the branded apparel businesses of Aditya Birla Group comprising ABNL's Madura Fashion division and ABNL's subsidiaries Pantaloons Fashion and Retail (PFRL) and Madura Fashion & Lifestyle (MFL) in May 2015. Post the consolidation, PFRL was renamed Aditya Birla Fashion and Retail Ltd.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.