This Retail Stock Is A Good Buy For Long-Term Investors

Motilal Oswal is betting on the stock of Aditya Birla Fashion and Retail to generate at least 20% returns from the long-term.

According to Motilal Oswal the company acquired Reebok India's current business and exclusive licensing rights for an investment of just Rs 750 million to Rs 1 billion.

Footwear segment to see growth

According to Motilal Oswal, in the last five years, the sportswear category has seen strong double-digit growth and emerged as the fastest growing segment in the Footwear market - it has grown to a size of Rs 900- 1000 billion, particularly in the last couple of years since the advent of COVID.

"Interestingly, given the specialized and high-performance nature of the product, Sportswear is one category within the Footwear market where consumers are highly brand loyal. Reebok India has a steady revenue/EBITDA of Rs 4.3 billion and Rs 721 million.

Attractive valuations

"We revise our target price for Aditya Birla Retail to Rs 340 (on stronger growth and an improved balance sheet), valuing it on Sept'23E EBITDA. We further assign an EV/EBITDA of 17 times to the Lifestyle Brands business and 16 times to the Pantaloons segment, and EV/sales of 1x to other businesses. Maintain Buy," the brokerage has said.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. 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.