Aditya Birla Fashion zooms 15% on plan to demerge Madura Fashion business

The company has authorised the management to evaluate vertical demerger of Madura Fashion & Lifestyle business from ABFRL into a separate listed company

Shares of Aditya Birla Fashion and Retail (ABFRL) jumped 15 per cent at Rs 243.45 on the BSE in Tuesday's intraday trade after the company authorised the management to evaluate vertical demerger of Madura Fashion & Lifestyle (MFL) business from ABFRL into a separate listed company.

Average trading volume on the counter more than doubled with a combined 8.12 million equity shares changing hands on the NSE and BSE in the first 5 minutes of trading. Moreover, there were pending buy orders for a combined 3.7 million shares on both the exchanges at 09:21 am. In comparison, the S&P BSE Sensex was down 0.23 per cent at 73,847. The stock of the Aditya Birla Group company had hit a 52-week high of Rs 265.75 on February 8, 2024.

MFL, consisting of four lifestyle brands viz Louis Phillippe, Van Heusen, Allen Solly & Peter England, along with casual wear brands viz. American Eagle and Forever 21, sportwear brand Reebok, and the innerwear business under Van Heusen will be demerged into a separate listed entity.

Post demerger, the remaining ABFRL will be focused on high-growth segments where there are tailwinds from a shift from unbranded to branded, premiumisation, rise of super premium and luxury, and rapid growth in Gen Z focused digital first brands. This is an attractive portfolio comprising multiple high growth segments in large addressable markets with strong value creation opportunities.

"Subsequent to the completion of the proposed demerger, ABFRL will raise growth capital within 12 months to infuse strength into its balance sheet, positioning itself well to pursue the large growth opportunity that lies ahead of it," the company said in a media release.

ABFRL has a network of 4,753 stores across approximately 37,106 multi-brand outlets with 9,781 point of sales in department stores across India (as on 31st December 2023).

It has a repertoire of India's largest brands in Louis Philippe, Van Heusen, Allen Solly and Peter England. Pantaloons is one of India's leading fashion retailers. The company, in September 2023, completed the acquisition of 51 per cent stake in TCNS Clothing Co. TCNS is India's leading women’s branded ethnic apparel company that designs, markets, and retails portfolio of women's branded apparel across brands W, Aurelia, Wishful, Elleven & Folksong.