MOSL: ADITYA BIRLA FASHION AND RETAIL (Buy)-Stellar performance amidst economic slowdown
ADITYA BIRLA FASHION AND RETAIL: Stellar performance amidst economic slowdown
(ABFRL IN, Mkt Cap USD2.8b, CMP INR254, TP INR300, 18% Upside, Buy)
- ABFRL delivered a strong beat v/s expectations on all fronts in a challenging demand environment, led by healthy same store performance for both Lifestyle and Pantaloons.
- We have largely maintained our revenue/EBITDA estimates to deliver CAGR of 14%/25% over FY19-21E. Lifestyle/Pantaloons is expected to deliver 11%/25% EBITDA CAGR driven by healthy store adds, SSSG coupled with improving margins and reducing losses in Fast Fashion and innerwear segment.
Strong growth across segments
- 3QFY20 revenue was up 12.3% YoY to INR26b (in-line) on the back of strong performance across businesses.
- EBITDA increased 25% YoY to INR2.2b (12% beat) with margin improvement of 80bp to 8.4%. Gross margin expanded 210bp YoY to 52% (150bp miss). PAT turned into loss of INR207m due to deferred tax; after adjustment, PAT stood at INR856m.
- Revenue/EBITDA of Lifestyle brands grew 14%/4.5% YoY to INR13b/INR1.4b due to strong 15% SSSG in the retail segment and focus on women’s/kids- wear (growth 35%/21%).
- Revenue/EBITDA for Pantaloons grew 12.7%/24% YoY to INR10.8b/INR1.1b with margin expansion of 90bp to 10.1%; SSSG stood at 4.9%.
- Fast Fashion revenue declined 13% YoY to INR890m. EBITDA loss reduced to INR40m YoY (v/s INR120m in 3QFY19), in line with the company’s strategy to rationalize cost. Other business revenue grew 40% YoY to INR1.5b on low base.
- Net debt was up INR710m YoY to INR22.4b (v/s 3QFY19) due to NWC and ESOPs.
Aditya Birla Fashion and Retail Limited, formerly Pantaloons Fashion & Retail Limited, is a fashion and lifestyle company. The Company is engaged in providing branded fashion apparels and accessories, and the retail sale of clothing, footwear and leather articles in stores. It operates through two segments: Madura Fashion & Lifestyle, and Pantaloons. Its Madura Fashion & Lifestyle segment is engaged in manufacturing and distribution of branded fashion apparel and accessories, and comprises over 1,800 exclusive brand outlets (EBOs) and approximately 150 value stores. Its Pantaloons segment is engaged in retailing of apparel and accessories, and comprises over 160 stores, including one Pantaloons Kids store and approximately 30 Factory Outlets. The Pantaloons segment has a diversified customer base with men, women, kids and non-apparels. The Company's brands include Louis Philippe, Van Heusen, Allen Solly and Peter England.
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