Aditya Birla Fashion and Retail Targeted at Rs 65 by Motilal Oswal

Aditya Birla Fashion and Retail Posts Strong Q4 FY26 Results

Aditya Birla Fashion and Retail (ABFRL) has reported a strong fourth quarter (4Q) of fiscal year 2026, with revenue growth of approximately 16% year-over-year (YoY) and a 29% YoY comparable earnings before interest, taxes, depreciation, and amortization (EBITDA) growth. The company's performance was driven by a healthy 17% YoY growth in Pantaloons, a 380 basis point (bp) YoY expansion in ethnic margins, and a reduction in losses in TCNS and TMRW.

Key highlights of the company's performance in the fiscal year 2026 (FY26) include a 11% YoY revenue growth, driven by a 14% growth in the ethnic segment and a 34% growth in TMRW, while Pantaloons reported a modest 4% YoY growth. The estimated pre-Ind-AS operating loss stood at approximately INR 4.6 billion, with a loss margin of 5.7%.

Pantaloons, a key brand in the ABFRL portfolio, reported a solid 14% like-to-like (LTL) growth in the fourth quarter, aided by a shift in end-of-season sales (EoSS) and increasing customer acceptance of the refreshed brand identity. Despite continued investments towards the ramp-up of the Own Label and Wholesale business (OWND), the EBITDA margin expanded by 30 basis points YoY, exceeding expectations by 185 basis points.

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The ethnic portfolio EBITDA grew by 42% despite muted revenue growth of 3%, driven by lower losses in TCNS, which is on track to achieve breakeven by the end of fiscal year 2027.

Valuation and Outlook

We value ABFRL on a sum-of-the-parts (SoTP) basis and ascribe a revised target price (TP) of INR 65. We reiterate our Neutral rating on the stock, pending further developments.

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