Aditya Birla Fashion - Q4FY21 First Cut (standalone) - ICICI Direct

(CMP: Rs. 190, MCap: Rs. 16193 crore)

ABFRL reported Q4FY21 results which were below our estimates. Company witnessed strong recovery in Jan-Feb, however March was impacted owing to resurgence in pandemic cases. Company received equity infusion worth Rs. 2250 crore (right issue and preferential issue) which was mainly utilised towards retiring debt in FY21.

Q4FY21 Earnings Summary

- ABFRL reported marginal revenue de-growth of 1.9% YoY to Rs. 1783.6 crore (on a low base of Q4FY20: revenue decline 5%). On an adjusted basis, revenue recovery in Q4FY21 stood at ~83%. On the segmental front, revenue from Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe and Peter England) de-grew by 6% YoY to Rs. 1003 crore. Retail channel sales (49% of revenues) recorded industry leading performance with revenue growth of 8% YoY (SSSG: -2%), while whole sale channel (24% of sales) continued to be the drag with recovery rate of mere 60%. Revenue from Pantaloons division declined by 3% YoY to Rs. 597 crore with SSSG of -10.6%. Revenue from other business (which includes innerwear & athleisure) grew by 36% YoY to Rs. 220 crore, with innerwear and athleisure wear recording sharp sales growth of 56% YoY

- Better product mix and tighter markdown management resulted in gross margins improving by ~200 bps YoY to 53.3%. Sustained rationalisation of fixed overheads (employee and rental expenses down 20% and 18% YoY, respectively) resulted in company reporting EBITDA (post IND-AS 116) of Rs. 257 crore (up 65% YoY). At the PBT level, company narrowed down its losses from Rs. 178 crore in Q4FY20 to Rs. 89.4 crore (I-direct estimate: loss of Rs. 75 crore)

- Company through better working capital management released ~ Rs. 785 crore in FY21. Coupled with equity infusion, ABFRL has significantly reduced its net debt from Rs. 2500 crore in FY20 to Rs. 654 crore in FY21. During the year ABFRL continued its strategy of significantly reducing cash burns through cost rationalisation measures (Rs. 1200 crore cost savings in FY21). Going forward, Company is focusing on converting certain fixed cost to variables to protect margins in case of uncertainties. It is also in talks with landlords for rental negotiations. Despite near term challenges, company will continue to aggressively expand its store presence with expected 400 stores in lifestyle brands and 60 stores for Pantaloons division

We will be coming out with a detailed report.

Shares of Aditya Birla Fashion and Retail Ltd was last trading in BSE at Rs.195.15 as compared to the previous close of Rs. 191.05. The total number of shares traded during the day was 328774 in over 3704 trades.

The stock hit an intraday high of Rs. 196.8 and intraday low of 181.7. The net turnover during the day was Rs. 63063105.

Source : Equity Bulls

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