Aditya Birla Fashion and Retail stock rises, expects twofold increase in FY20 profit

By

Isabelle Crossley

Published
Dec 14, 2018

Aditya Birla Fashion and Retail’s stock rose by 10 percent in three trading sessions due to strong belief that the business will see revenue increase twofold by the 2020 financial year.

Aditya Birla Fashion and Retail (ABFRL), which owns fashion brands including Peter England, Louis Phillipe, and the Pantaloons chain, has seen its revenue increase significantly during the current fiscal year (FY19). This has caused a number of analysts to predict that the business’ net profit will reach Rs 263 crore ($39.5 million) in the next financial year with earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Rs 760 crore and revenue of Rs 9,200 crore, as reported by ET Bureau.

Analysists have such high predictions for the brand because the September 2018 quarter saw a 62 percent year-on-year increase in EBITDA at Rs 162 crore. Revenue also increased by 11 percent to Rs 2,007 crore in the quarter. ABFRL also has the licence for retailing the US fast fashion brand Forever 21 in India and this has proved a lucrative venture so far with continued expansion on the horizon. Forever 21 does currently run at an operating loss but this is reducing.

In order to increase profitability, ABFRL has reduced its discounting. The business expects its margin expansion to continue fuelled by entering new categories. The Pantaloons chain will continue to introduce private labels with higher profit margins and also expand its product categories.

The business will open 300 stores in the current financial year for several of its brands and will enter new markets in Tier 2 and 3 cities.