Aditya Birla Fashion jumps 4%, hits record high on impressive Q3 results

The company delivered a strong performance and beat expectations on all fronts in a challenging environment

Shares of Aditya Birla Fashion and Retail rose 4 per cent to its all-time high level of Rs 264 on the BSE on Friday in an otherwise subdued market after the company reported impressive December quarter results (Q3FY20).

The stock of the Aditya Birla Group company surpassed its previous high of Rs 263, touched on January 1, 2016. In the past three trading days, it has gained 15 per cent, against 1 per cent rise in the S&P BSE Sensex.

The company’s standalone profit before tax (PBT) during the quarter jumped 58 per cent year on year (YoY) at Rs 111 crore against Rs 70 crore in the year-ago quarter. Revenue grew by 12 per cent at Rs 2,562 crore on YoY basis. Earnings before interest, tax, depreciation, and amortisation(Ebitda) margin improved to 8.9 per cent in Q3FY20 from 8.2 per cent in Q3FY19.

The firm delivered a strong performance and beat expectations on all fronts in a challenging environment, led by healthy same store performance for both Lifestyle and Pantaloons.

The management said the transition to the new corporate tax regime should improve cash flows for the next 2 years. With stronger growth and profitability, the management is now more confident and has become aggressive on expansion plans.

“The Company is poised to continue its market-leading performance on the back of strong portfolio of brands, presence across all key consumer segments, wide distribution network and leadership in brand building, designing and merchandising”, it said.

Analysts at Emkay Global Financial Services maintain ‘buy’ rating on the stock with target price of Rs 280 per share.

“Losses in new businesses saw a marginal reduction. Management is optimistic on the growth outlook for innerwear but expects breakeven to take time. Debt increased marginally but to reduce ahead given stronger cash flows and steady capex of Rs 400 crore,” the brokerage firm said in result update.

“Strong growth in Lifestyle/Pantaloons should continue on the back of aggressive store addition. Further, improving margin in Pantaloons and reduction in losses of Fast Fashion/other businesses should generate healthy free cash flow (FCF) and RoCE, which in turn could garner better valuations,” analysts at Motilal Oswal Securities said in result update with ‘buy’ rating on the stock and target price of Rs 300 per share.

Aditya Birla Fashion and Retail is one of India’s leading apparel companies and is home to India’s most iconic apparel brands. With presence across varied segments, price points and wearing occasions. The company operates a well-diversified portfolio.