ABFRLNSEMay 28, 2025

Aditya Birla Fashion and Retail Limited

8,348words
109turns
9analyst exchanges
4executives
Management on call
Ashish Dikshit
MANAGING DIRECTOR – ADITYA BIRLA FASHION AND RETAIL LIMITED & ADITYA BIRLA LIFESTYLE BRANDS LIMITED
Jagdish Bajaj
CHIEF FINANCIAL OFFICER, ADITYA BIRLA FASHION AND RETAIL LIMITED
Vishak Kumar
DIRECTOR AND CHIEF
Sangeeta Tanwani
DIRECTOR AND CHIEF
Key numbers — 40 extracted
490 million
xt 2, 3 days, and ABLBL is on track to be listed by the end of June. We successfully raised USD 490 million of equity capital through QIP and preferential issuance during this quarter. With that, we have i
INR2,350 crore
have infused tremendous strength into the balance sheet of demerged ABFRL with an availability of INR2,350 crores cash at consolidated level to pursue aggressive growth across its multiple high-growth platforms
200 basis point
sharper execution across businesses. Both entities delivered robust profitability, ABLBL clocking 200 basis points margin expansion, while demerged ABFRL more than doubling its EBITDA. Coming to the financial
INR148 crore
nced the overall quality of its distribution network. Please note that for ABLBL, depreciation of INR148 crores on discontinued operations was not charged in consolidated financials due to asset classificatio
3%
eciation. ABLBL delivered a resilient performance in Q4 '25, posting normalized revenue growth of 3% to INR1,942 crores. Post considering intercompany elimination adjustment, revenue reported unde
INR1,942 crore
. ABLBL delivered a resilient performance in Q4 '25, posting normalized revenue growth of 3% to INR1,942 crores. Post considering intercompany elimination adjustment, revenue reported under discontinued opera
INR1,859 crore
sidering intercompany elimination adjustment, revenue reported under discontinued operations were INR1,859 crores. EBITDA stood at INR330 crores, reflecting an 18% Y-o-Y growth. And the normalized EBITDA margin
INR330 crore
adjustment, revenue reported under discontinued operations were INR1,859 crores. EBITDA stood at INR330 crores, reflecting an 18% Y-o-Y growth. And the normalized EBITDA margin that is ex demerger impact o
18%
under discontinued operations were INR1,859 crores. EBITDA stood at INR330 crores, reflecting an 18% Y-o-Y growth. And the normalized EBITDA margin that is ex demerger impact of elimination expanded
17%
zed EBITDA margin that is ex demerger impact of elimination expanded by 200 basis points to reach 17%. For the full year '25, ABLBL reported normalized revenue of INR7,830 crores with a normalized
INR7,830 crore
ded by 200 basis points to reach 17%. For the full year '25, ABLBL reported normalized revenue of INR7,830 crores with a normalized EBITDA margin of 16.2%, a 100 basis point improvement over the previous year.
16.2%
year '25, ABLBL reported normalized revenue of INR7,830 crores with a normalized EBITDA margin of 16.2%, a 100 basis point improvement over the previous year. Full year revenue under discontinued opera
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Guidance — 20 items
Jagdish Bajaj
opening
“These shares will be credited within the next 2, 3 days, and ABLBL is on track to be listed by the end of June.”
Jagdish Bajaj
opening
“INR50 crores higher interest in ABLBL from 1st April 2024, which will not be there next year.”
Jagdish Bajaj
opening
“Reported EBITDA includes gain of INR97 crores on account of discontinuation of interdivision elimination post demerger as company's financials get reset to report on independent and stand-alone basis going forward.”
Jagdish Bajaj
opening
“The recent fundraise will be partly deployed to expand the network to over 300 stores in the next 3 years.”
Jagdish Bajaj
opening
“With peak losses behind us, further scaling of the Ethnic portfolio shall drive profitability improving going forward.”
Jagdish Bajaj
opening
“We expect to see significant EBITDA improvement in FY '26 with the TCNS portfolio projected to turn pre-Ind AS EBITDA-positive by FY '27.”
Ashish Kanodia
qa
“Now when I look at the guidance, you're talking about doubling the margin.”
Ashish Kanodia
qa
“So do you see what will be the bridge for - - at a company level going to 18% margin?”
Jagdish Bajaj
qa
“Now it will not be there going forward because both are independent companies.”
Jagdish Bajaj
qa
“And on long-term margin guidance and Pantaloons' margin, Ashish?”
Risks & concerns — 4 flagged
And the normalized EBITDA margin that is ex demerger impact of elimination expanded by 200 basis points to reach 17%.
— Jagdish Bajaj
Meanwhile, TCNS saw a revenue decline during the quarter due to ongoing distribution rationalization.
— Jagdish Bajaj
So a significant amount of the sales growth delta that you would see is because we were scaling down F21 and you would see the impact of that.
— Vishak Kumar
And finally, for Lifestyle brands, retail has done well, but wholesale and others have had a bit of volatile performance over the last few quarters.
— Kunal Shah
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Q&A — 9 exchanges
Q
The first question is on the demerged ABFRL. Now when I look at the guidance, you're talking about doubling the margin. Now full year FY '25 post-Ind AS margin is 9% excluding the other income. And if you have to take it to, say, 18% in the next 5 years, what will drive this because Pantaloons it's at around, say, 16% to 17% margins? So do you see what will be the bridge for - - at a company level going to 18% margin? The second thing on the Pantaloons is part of, at least, the outside view is that when we look at the margin expansion, it's also driven through closure of these underperforming
Jagdish Bajaj
So let me take Q3 first. INR97 crores is the elimination or writing up of the inventories in line with the purchase price of Pantaloons. So this is a onetime adjustment, which was earlier knocked off as interunit division. Now it will not be there going forward because both are independent companies. And on long-term margin guidance and Pantaloons' margin, Ashish? I think we have put out a longer-term guidance for each of our business segments in the last analyst meet that we conducted. It's in public domain, so you can look at some of those numbers to get a reference on that. But coming to de
Q
First question, demerged ABFRL has started off with a net cash balance, right? So would this current cash balance be sufficient to fund the planned expansion and investment across the different business segments in this company?
Ashish Dikshit
Yes. Garima coming back to your question, as Jagdish mentioned, there is sufficient capital, close to INR2000 crore-plus, which is lying as a gross cash in the ABFRL subsidiary. You would also know that we are looking to raise capital separately in TMRW, which would be required to fund that part of the business. So we feel adequately capitalized to drive this over next 3, 4 years. All right. And you did mention that the process of finding an external investor for TMRW is on. Is there any time line you have in mind as to by when you think this process might see some result? Sometime this financ
Q
Sir, I was referring to this company by balance sheet that you have provided in the PPT. The net working capital for the demerged ABFRL is at negative INR136 crores and there are some businesses like TCNS, which would be operating at around INR200 crores to INR250 crores of working capital. This implies that the working capital for the other businesses is even more negative. So I wanted to check are these sustainable levels? And what is the long-term assumption that we should work with?
Ashish Dikshit
So I think two parts. One is, as you know, ABFRL demerged entity has multiple businesses. So they will behave differently, as you rightly mentioned, different parts of the business. For a regular branded business with small format stores, we operate with early double-digit net working capital to sales to high single digit. Our most productive, from a capital point of view -- from a working capital point of view, our most productive businesses are in the Pantaloons segment, which is the largest part of this company. And that operates with close to zero working net working capital. A part of it
Q
Sir, if we are reading the balance sheet for the ABFRL business, the net cash actually comes to around INR9.3 billion-odd, the net cash that is. Now of that INR9.3 billion-odd, if you look at the capex that you just announced, that would be around INR5 billion-odd. Now assuming there will be still some losses at the PAT level in FY '26, do you still think that it would suffice for the expansions and the plans going ahead?
Jagdish Bajaj
Yes, Gaurav, thanks. As Ashish explained, the gross cash available with ABFRL demerge is INR2,300 crores, right? Then we have a long-term loan, which is up to FY '30 and -- which will go -- the repayment go up to '30, '31. And then the subsidiaries borrowings, that includes borrowing in TMRW also. As Ashish explained, we have a plan to raise separate capital in TMRW. If I exclude that, we have adequate cash and we are well capitalized at our company for taking care of the capex, working capital and the loss funding for next 2 years, which according to me, the losses will be for next 2 years an
Q
A few questions from my side. The first one is on Pantaloons. So if you could share any update on the whole redesigning and reimaging of stores that have been conducted. So when is this expected to be completed? And any initial positive signs that you're getting out of here...
Sangeeta Tanwani
So this is one of the key pillars of our strategy, as we had also mentioned in the investor meet, delivering a distinctive store experience for our customers. And within that, our store design and redoing our store layout, I think, are both very important set of actions that we have put in place. So if you look at our network today, about 400-plus stores, many of them are with the retail identity that we had launched 3 to 4 years back. The work that we had talked about is actually refreshing that and also changing the layouts of some of our existing stores and renovation of stores, which we do
Q
My first question is on Pantaloons. So you mentioned opportunity for 200, 300 bps margin expansion over the coming few years. Does this also include any potential, let's say, lower- margin operations that you will have in Style Up over the coming years or this is just Pantaloons format? And do you expect any meaningful losses or lower -- in Style Up in the coming years?
Ashish Dikshit
No, I was referring more to Pantaloons' margin. This question was more specific to Pantaloons format, so I was responding more to Pantaloons. Style Up will have its own journey, Kunal. As I mentioned, we have a fairly -- a large part of our thesis of growth in this company is built around opening up that value end of the market for us. We look to open about 250 to 300 stores as we go forward. And a part of that would entail a little bit of margin dilution on the segment itself, perhaps in first 12 to 18 months. Understood. Understood. The second question is on ABLBL. Beyond Lifestyle brands, i
Q
Sir, firstly, I just wanted some color on Sabyasachi. This is a very large business now within ABFRL and I believe it's a more profitable business, so growth of 15% in fourth quarter. Can I have the number for FY '25, how much it has grown? And how do you look at growth in this particular segment going forward? Are you planning to add more stores? Is it all LTL driven, something on this aspect?
Ashish Dikshit
So as you know, Sabyasachi business operates with very few stores and expansion, while selective, is not going to be the primary driver for this business. The business is growing at early double digit this year, but an addition of a store here and there can sort of change the trajectory a little bit. Over a long period of time, we believe this would be closer to 20% growth business over 4 to 5 years with few years being higher if you add a store and few years being lower than that. Most part of the growth of the business will be organic. It's a luxury brand, perhaps India's only true luxury br
Q
Sir, on the ABFRL demerged entity, if we were to add back that INR97 crores on the gross margin side, then the gross margin is basically up by close to 300 basis points. And on the post- Ind AS EBITDA is adjusting to the same thing, is up by 410. So the cost of retailing, which is the gap between the two is up by 130 basis points. And this includes your store closure effort and also you said leverage on procurement stuff. But 130 basis points for the entire, is there more juice left here which probably we will see in the subsequent quarters or this is it?
Ashish Dikshit
So I think this is -- I wouldn't say any part of this business this is it because this consists of many businesses with very, very different margin trajectory, margin profile. So I would be hesitant to make observation because the mix of businesses in this itself is going to change as we go forward. I think you should look at individual businesses, which is why we give segmental results in this, which contribute to the overall picture. So it will more be driven by the mix of the individual businesses and the improvement within the business itself. So there is a significant improvement possible
Q
Congratulations on a good operational performance across both the entities. I just have quick clarification on 2 or 3 items of both ABLBL and ABFRL. First is the interest cost, which still continues to be higher despite the repayment of debt. So do you see the run rate same as going forward for the next couple of quarters as well?
Jagdish Bajaj
See, the interest cost, which you are seeing in both the companies in published results is a factor of financial charge as well as the Ind AS impact. So financial cost in ABFRL will come down significantly, but the Ind AS impact will continue. In ABLBL business, the finance cost should come down INR50 crores to INR60 crores next year, but the Ind AS impact will continue. Okay. And can you share similar number for ABFRL as to how much reduction in interest cost can we see on the financial charge? If you see my debt profile, you will realize that from a debt of INR2,000 crores last year in March
Speaking time
Ashish Dikshit
25
Jagdish Bajaj
16
Moderator
11
Gaurav Jogani
10
Devanshu Bansal
8
Vishak Kumar
8
Rajit Aggarwal
6
Garima Mishra
5
Archana Menon
5
Samir Gupta
5
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Opening remarks
Jagdish Bajaj
Thank you. Good afternoon, everyone. Welcome to the Q4 FY '25 earnings call. Thank you for joining us today. We are pleased to report a strong close to what has been a transformative year for our business. With culmination of our demerger exercise, this quarter marked the beginning of a new era for Aditya Birla Group's fashion business as two powerful independent fashion entities now commence their distinct value-creation journeys. Let me begin with some key corporate updates for Q4. We successfully completed the demerger, creating two focused fashion power houses, Aditya Birla Lifestyle Brands Limited, ABLBL; and Aditya Birla Fashion and Retail Limited, ABFRL, both now set on independent high-growth trajectories. The Board of ABLBL has allotted shares to all the eligible shareholders of ABFRL as per the record date. These shares will be credited within the next 2, 3 days, and ABLBL is on track to be listed by the end of June. We successfully raised USD 490 million of equity capital th
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