Buy Aditya Birla Fashion and Retail; target of Rs 225: ICICI Direct

ICICI Direct is bullish on Aditya Birla Fashion and Retail recommended buy rating on the stock with a target price of Rs 225 in its research report dated March 02, 2021.

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ICICI Direct’s research report on Aditya Birla Fashion and Retail

At the recently held virtual ABFRL analyst meet, the company embarked on a five-year growth strategy plan with key emphasis on generating healthy FCF across business formats (cumulative FCF worth ~Rs 1000 crore in FY22-26E) and RoCE of ~25% by FY26E. ABFRL has charted out growth strategies to become a ~US$ 2.8 billion entity (Rs 21000 crore) by FY26E, translating to 15% CAGR in FY20-26E. It is betting big on the ethnic play (through latest acquisitions) with the category expected to grow at a fast rate (from Rs 50 crore in FY20 to Rs 2000 crore by FY26E). Innerwear segment, in a short span of time, has seen significant ramp up with revenues touching Rs 280 crore in FY20 (launched in FY17). The management expects innerwear revenues to sustain healthy momentum driven by increased touch-points and post 32% CAGR in FY20-26E, with a target of achieving break-even by FY23E.

Outlook

We continue to like ABFRL in apparel space owing to a strong brand positioning capturing various price points with robust brand recall. We maintain BUY with revised TP of Rs 225 (earlier TP: Rs 210).

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