Neutral Aditya Birla Lifestyle Brands; target of Rs 190

Aditya Birla Fashion & Retail’s Future Hangs in the Balance as Analysts Remain Cautiously Optimistic

Aditya Birla Fashion and Retail Ltd (ABFRL), a key player in India’s lifestyle and apparel industry, is under the market spotlight after brokerage firms maintained a ‘Neutral’ rating on the stock, pegging a target price of ₹190, which implies limited upside from its current trading levels.

The subdued rating stems from concerns around elevated debt levels, continued operating losses in new verticals, and uncertainty in discretionary consumption recovery, despite robust brand equity and strategic investments in high-potential categories.

Recent Stock Performance and Financials

As of June 21, 2025, ABFRL’s stock trades at approximately ₹181 on the NSE, delivering modest returns over the past year. The company’s Q4FY25 results were a mixed bag — revenue saw a year-on-year growth of 12.8% at ₹3,200 crore, but EBITDA margins remained under pressure at 7.2%, reflecting higher costs and losses from emerging business segments.

Net loss for the quarter stood at ₹118 crore, primarily due to continued investment in TMRW (its D2C portfolio) and the ethnic wear cluster, which are yet to turn profitable.

Brokerage Views: Neutral Stance Reiterated

Brokerage houses including Motilal Oswal and ICICI Securities have reiterated a neutral stance, citing that near-term gains are capped despite the company’s diversified brand mix and future growth potential.

“While ABFRL remains a leader in the Indian apparel space with strong brands like Pantaloons, Van Heusen, and Allen Solly, the continued burn in newer verticals weighs on overall profitability. We recommend a hold with a 12-month target price of ₹190,” said Rahul Bhagat, Equity Analyst at ICICI Securities.

“Debt remains a concern, with net debt at ₹2,800 crore as of March 2025. Though the capital infusion by GIC and other investors has improved liquidity, operational efficiency and profitability in new businesses are key to rerating,” added Anjali Shah, Consumer & Retail Analyst at Motilal Oswal.

Strategic Initiatives: Growth vs Profitability

ABFRL has taken aggressive strides in expanding into ethnic wear, innerwear, and digital-first brands. The acquisition of Sabyasachi Couture, House of Masaba, and Shantanu & Nikhil along with the creation of the TMRW platform marks a strategic pivot toward premiumization and digitalization.

The company aims to achieve ₹21,000 crore in revenue by FY27, driven by both organic and inorganic growth. However, analysts warn that this long-term vision comes at the cost of near-term profitability.

“The long runway for the ethnic and innerwear businesses is undeniable, but ABFRL will have to balance growth aspirations with financial discipline,” noted Pratik Mehta, Retail Sector Head, Edelweiss.

Market Context: Sector Faces Volatility

India’s lifestyle retail sector continues to face headwinds with subdued rural demand, inflationary pressure on input costs, and shifts in consumer spending patterns post-pandemic. Moreover, rising competition from international players like Uniqlo, H&M, and the growing dominance of e-commerce platforms are reshaping market dynamics.

Despite these pressures, urban consumption remains resilient, especially in the premium and luxury segments. ABFRL’s strategic positioning in these categories could offer insulation from broader retail volatility.

Investor Outlook: Wait and Watch Approach

From an investor perspective, ABFRL presents a classic risk-reward trade-off. On one hand, it boasts of a well-entrenched brand portfolio, pan-India retail footprint, and a forward-thinking digital strategy. On the other, it faces margin compression, execution challenges in new segments, and lingering debt concerns.

“If the company manages to scale its digital and ethnic wear businesses efficiently while improving return ratios, the valuation could be re-rated. But for now, we suggest investors maintain a neutral stance,” said Maya Iyer, Portfolio Manager at Axis Securities.

In summary, ABFRL’s future trajectory hinges on execution excellence across its new growth vectors and judicious capital allocation. Investors are advised to keep a close watch on operational metrics, debt reduction strategies, and the pace of margin recovery in the upcoming quarters.