Aditya Birla Fashion & Retail witnessed faster recovery across both Madura and Pantaloons

Chirag Batavia • 22 February 2021

Aditya Birla Fashion and Retail (ABFRL): 

 Company witnessed faster recovery across both Madura and Pantaloons in Q3FY21. The company highlighted that 300+ stores were opened in 9MFY21. Pantaloons e-commerce sales grew 2.3x yoy on the back of stronger assortment and own site grew at 50% yoy.

 Higher revenues and higher cost savings led to healthy EBITDA margin of 18%. EBITDA was boosted by operating leverage, lower ad spends, corporate travel and employee expenses. ABFRL was able to save Rs1030 cr of fixed cost in 9MFY21 of which Rs157 cr of savings accrued in 3QFY21.          

 ABFRL generated ~Rs590 cr cash in 3QFY21. Net debt currently stands at Rs58 cr as funds were received from Flipkart Group (~Rs1500 cr) and rights issue (Rs750 cr in 9MFY21).

 The company could close FY21 with debt of Rs250-300 cr as it would have to assume debt in order to fund the Sabyasachi acquisition (~Rs.400 cr). This will still be a remarkable improvement over March 2020 debt levels of Rs2500 cr.

 The deleveraging story remains intact. Higher earnings estimates and roll-forward to March 2023 drives higher Sum of Parts based Fair Value of Rs.200.

Aditya Birla Fashion and Retail (ABFRL): BUY
Dated: 22nd February 2021
CMP: Rs.166
Fair Value: Rs.200
Potential Upside: 20.5%
Market Cap: Rs. 14,819 Cr
Time Frame: 12 months

Note: The above is a brief note on the company, based on the inputs of KIE research report dated 8th February 2021, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental.      
Disclaimer: http://bit.ly/2n5AxIE


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