Aditya Birla Fashion & Retail Ltd (ABFRL) posted ₹14,973 Cr in revenue for FY25 — up 7% YoY — and yet ended with a loss of ₹456 Cr. The company blamed everything from “restructuring” to “one-time impairments” and a demerger. CMP is ₹89 — and that might just be the brand value left on the shelves after discounts.

👕 About the Company

• Business: Branded apparel retail under brands like Pantaloons, Van Heusen, Allen Solly, Louis Philippe, Forever 21, Jaypore, and Sabyasachi
• Recent Moves: Acquired TCNS (W + Aurelia), planning Madura Lifestyle demerger
• Market Cap: Massive — but the market seems fashionably disinterested lately
• Customers: Mostly mall-walkers with discount coupons

In short, ABFRL is India’s Zara-meets-Sale sign — with a business model that sells ₹3000 kurtas for ₹899, twice a month.

🧑‍💼 Key Managerial Personnel (KMP)

💬 Auditors passed the books, but they probably needed a fashion break after reading the impairments note.

📊 Financials (FY25 Consolidated)

They made money. They spent more. The result? A glorified loss statement draped in a Sabyasachi shawl.

💸 Forward-Looking Fair Value (FV)

• EPS (Trailing 12M): Negative. Oops.
• Normalised EPS (ex-exceptional): Maybe ₹1.00
• Sector PE for Retail: ~50x (for profitable peers)
• FV Estimate: ₹50 if the fashion gods bless earnings, ₹120 if the demerger magic works

📉 CMP = ₹89
🤷‍♂️ Current price implies future hope, not present logic.

🧾 Balance Sheet Highlights

💡 Deleveraging? ✅
💀 Store liabilities still haunting? ✅
🎯 Inventory write-downs avoided? ❌ (Still ₹2400+ Cr)

🧪 EduInvesting Take

Let’s be honest. ABFRL is not a broken brand — it’s just an over-engineered Excel model with lipstick.

• Every quarter they buy new brands like a collector, then spend the next 4 crying over integration costs.
• They de-merged Madura to simplify. Now they look more complicated than before.
• They raised ₹4,172 Cr in fresh capital this year — and still made a loss. That’s a record even Paytm is jealous of.

But here’s the kicker: Despite ₹456 Cr in losses, the company made ₹1,643 Cr in operating cash flow.

That’s not a dying brand. That’s a powerlifter trying to run a fashion marathon — collapsing at every catwalk, but still somehow lifting weights.

🔥 Key Events This Year

• Acquired TCNS (W + Aurelia): 5.57 Cr shares issued in Sept 2024
• QIP & Preferential Allotments: ₹4,172 Cr raised at ₹272–317 per share
• Demerger of Madura Lifestyle Brands: Assets & liabilities moved to ABLBL on May 1, 2025
• Exceptional Gains: ₹161 Cr gain on Goodview stake revaluation
• Exceptional Losses: ₹98 Cr impairment from store shutdowns

This is not a company. It’s a soap opera in Zara packaging.

📉 Risks & Red Flags

• 😱 TCNS integration hasn’t improved profitability yet
• 🧊 High lease costs (₹205 Cr annually) remain sticky
• 🔄 Frequent restructurings confuse investors
• 💳 Debt still exists — don’t let the equity raise fool you
• 🧶 Madura demerger = diluted narrative + unclear financial separation

🔮 Final Verdict

ABFRL is a paradox.

• Profitable segments ✅
• Strong brands ✅
• Chronic losses ✅
• Exciting strategy ✅
• Execution mess ✅

CMP ₹89 might look cheap, but the real question is — will FY26 be their fashion week comeback or another clearance sale?

Author: Prashant Marathe
Date: May 24, 2025