New Delhi: Aditya Birla Fashion and Retail Ltd (ABFRL)’s decision to demerge its portfolio of brands hasn’t addressed the challenges the company has been facing lately. The retail major has reported a 9% increase in Q4 revenue from Rs 1,575.12 crore in Q4 FY24, to Rs 1,719.48 crore in the same period this year, even as the company’s net loss reduced significantly from Rs.266.36 crore last year to Rs.23.55 crore in Q4 FY25.
The company had raised Rs. 49 crores of equity through preferential issues of shares in the last quarter of FY2024-25. The company has expanded aggressively over the years, and has a network of 4.600+ stores with a presence in many multi brand outlets. It has acquired and partnered with 17 brands since the Aditya Birla Group ventured into fashion retail in 1999. The company is currently struggling to manage its high debt levels and reverse the decreasing operating profit over the last 5 years. Its net sales were down 31.73% at Rs.3,920 crore
“For the next 12 months, leveraging its strong caseloads, ABLBL is set to embark on a historic expansion, with an aggressive retail rollout across its brand portfolios, heading over net 300 stores across the country to accelerate growth and deepen market presence. Now operating as an independent entity post-demerger, ABLBL is uniquely positioned to chart its own value creation journey,” Jagdish Bajaj, the chief financial officer at the newly demerged entity, said at the company’s post-earnings call on May 26.
“With a leading presence across multiple high-growth platforms, the demerged ABFRL is well placed to emerge as a strong, diversified player in the sector. With over ₹2,350 crore of gross cash at the consolidated level following the recent capital raise, the Company is all set to pursue aggressive growth to triple in scale and double in profitability over the next 5 years,” ABFRL said in a press release.
Though the company claims the demerger would allow it to focus on capacity utilization and focus on niche markets, analysts have mixed reactions to the company’s near term growth prospects.
Some brokerages like Jefferies have maintained a ‘Buy’ rating on the stock post-demerger, others have maintained their ‘Hold’ rating while others have downgraded the company’s shares to ‘Sell’.
After the demerger was announced on May 22, ABFRL’s shares have reduced by more than 65% since trading on May 21.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
