The stock is trading at ₹290, reflecting challenges in profitability but steady revenue growth
Aditya Birla Fashion Share Price – Aditya Birla Fashion and Retail Limited (ABFRL) is a prominent player in India’s retail and textile industry. Currently, the stock is trading at ₹290, with a market capitalization of ₹31,101 crore. The stock has experienced significant volatility, with its 52-week high at ₹364 and a low of ₹198, reflecting the mixed sentiment around the stock’s performance.
Key Metrics and Financials
Overview
- Stock Price (Current): ₹290
- 52-Week High/Low: ₹364 / ₹198
- Book Value: ₹38.3
- Dividend Yield: 0.00%
- ROE: -20.2%
- ROCE: 0.25%
Revenue and Profitability
The company reported quarterly sales of ₹3,644 crore, reflecting a 12.94% growth year-on-year. However, the company’s bottom line remains in the red, with a net loss of ₹215 crore. The operating profit margin (OPM) for the quarter stands at 10%, which is steady but reflects pressure on profitability due to rising costs.
Debt and Interest Coverage
ABFRL has a low interest coverage ratio, highlighting the financial stress caused by rising interest expenses. The company has a high debt burden, which impacts profitability and limits its ability to reinvest for growth.
Key Strengths
- Revenue Growth: The company has achieved strong sales growth, with a compounded annual growth rate (CAGR) of 39% over the last three years.
- Dominant Market Presence: ABFRL is a leader in India’s fashion retail sector, with a diverse portfolio of brands catering to various market segments.
Key Challenges
- High Valuations: The stock trades at 7.60 times its book value, indicating overvaluation compared to industry peers.
- Negative ROE: The return on equity is -20.2%, reflecting inefficiencies in generating shareholder value.
- Decreasing Promoter Holding: Promoters reduced their stake by 2.72% in the last quarter, raising concerns about confidence in the company’s future prospects.
- Consistent Losses: Despite revenue growth, the company has been reporting net losses, with a trailing twelve-month (TTM) loss of ₹804 crore.
Technical Analysis
The stock chart reflects a bearish trend in recent trading sessions. The following observations summarize the stock’s performance:
Moving Averages
- The stock is trading below its 50-day, 100-day, and 200-day moving averages, indicating persistent selling pressure.
- Immediate resistance levels are at ₹292.40 and ₹296.56, while support lies at ₹285.00.
Relative Strength Index (RSI)
The RSI suggests neutral momentum, with neither overbought nor oversold conditions. This indicates that the stock may continue to trade within a narrow range unless a significant catalyst emerges.
Peer Comparison
| Company | CMP (₹) | Market Cap (₹ Cr.) | ROCE (%) | Dividend Yield (%) | Sales Growth (%) |
| Aditya Birla Fashion | 290 | 31,101 | 0.25 | 0.00 | 12.94 |
| Shoppers Stop | 617 | 6,788 | 11.84 | 0.00 | 7.29 |
| V2 Retail | 1,139 | 3,940 | 10.85 | 0.00 | 55.81 |
| Ganesha Ecoverse | 47 | 116 | 28.20 | 0.00 | 306.42 |
ABFRL lags behind its peers in terms of return on capital and profitability. Ganesha Ecoverse leads in ROCE, while V2 Retail has shown remarkable sales growth.
Quarterly Performance
- Q2 FY24 Highlights
- Sales: ₹3,644 crore (up 12.94% YoY)
- Net Loss: ₹215 crore
- Operating Profit Margin (OPM): 10%
The company’s operating profit improved marginally, but higher interest and depreciation expenses continue to weigh on the bottom line.
Long-Term Outlook
Aditya Birla Fashion’s diversified portfolio, which includes brands like Louis Philippe, Van Heusen, and Pantaloons, provides it with a strong foundation in the retail space. However, the company’s profitability is under pressure due to rising expenses and a high debt burden.
Opportunities
- Growing Retail Market: India’s retail sector is expected to grow significantly in the coming years, providing ample opportunities for ABFRL to expand its market share.
- Focus on Digital: The company’s emphasis on omnichannel retail and digital transformation can drive future growth.
Risks
- Debt Management: High interest costs and low profitability may hinder growth plans.
- Economic Slowdown: Any slowdown in consumer spending could impact revenue growth.
Investment Perspective
Short-Term View
The stock is likely to remain under pressure in the short term due to its bearish trend and weak fundamentals. Traders should watch key support and resistance levels to identify trading opportunities.
Long-Term View
Long-term investors should focus on the company’s ability to improve profitability and manage debt. While the stock’s valuation appears stretched, its leadership position in the retail sector and revenue growth make it a potential candidate for patient investors.
Conclusion
Aditya Birla Fashion is at a crossroads, with strong revenue growth countered by persistent losses and financial challenges. While the company’s market leadership and brand portfolio provide a solid foundation, its high debt and negative ROE are significant concerns.
Investors should adopt a cautious approach, closely monitoring the company’s financial performance and operational improvements. For now, the stock remains a high-risk, high-reward proposition.
