Emkay Global Maintains Buy Call on Aditya Birla Lifestyle Brands, Sets Target Price at Rs 140
Emkay Global Financial Raises Outlook for Aditya Birla Lifestyle Brands
Aditya Birla Lifestyle Brands (ABLBL) has reported a significant improvement in revenue growth, reaching approximately 12% in the fourth quarter (Q4) of the fiscal year, compared to around 6% in the first nine months (9M). This growth can be attributed to the acceleration of online sales and the ramp-up of the business-to-business (B2B) segment, while the growth of Lifestyle Exclusive Brand Outlets (EBO) and Multi-Brand Outlets (MBO) channels remained in the high single digit.
Key Highlights
| Quarter | Revenue Growth (%) |
|---|---|
| Q4 FY26 | ~12% |
| 9M FY26 | ~6% |
| FY26 | Double-digit growth for Arvind Fashions |
| FY27 (expected) | ~300 gross additions |
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In comparison to Arvind Fashions, which reported double-digit growth in the fiscal year 2026, ABLBL's growth of around 8% has been slower. However, the company expects an improvement in net adds in the fiscal year 2027. The emerging business is expected to drive growth, with Reebok expected to see healthy growth led by around 50 store additions and strong like-for-like (LFL) trends with product innovations. Additionally, VH Innerwear is expected to see a margin turnaround by the fiscal year 2028.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin saw an increase of around 30 basis points in Q4, primarily driven by a 400 basis points margin expansion in the emerging segment and a one-time benefit of around Rs200 million from the production-linked incentive (PLI) scheme in Q4. However, the company remains cautious of inflation in crude derivatives and a potential demand slowdown due to rising inflation, although there is no visible impact as of now. Reflecting this, Emkay Global Financial has trimmed its FY27 margin estimate, while the FY28 estimate remains largely unchanged.
Recommendation
We maintain a BUY rating on ABLBL, with a target price of Rs140 (20x March 2028 EBITDA estimate), as Q4 EBITDA was largely in line with our expectations.
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Investor Takeaway
Investors should consider Aditya Birla Lifestyle Brands for its potential growth prospects.
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