The shares of Aditya Birla Fashion and Retail Ltd gained 2 per cent during morning trade on Tuesday after the company recorded a strong recovery during the December quarter.
Analysts see further upside on the stock on the back of a sustained recovery and a focus on debt reduction.
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At 12 pm, the company was trading at ₹168.05 on the BSE, up by ₹3.45 or 2.10 per cent. It opened at ₹167.90 as against the previous close of ₹164.60. It hit an intraday high of ₹172 and an intraday low of ₹165.00. On the NSE, it was trading at ₹168.05, up ₹3.65 or 2.22 per cent.
Significant demand
The company witnessed a significant acceleration of business recovery in Q3-FY21. It reported a consolidated net profit of ₹58 crore and a revenue of ₹2,076 crore in the quarter ended December 2020.
The pace and extent of recovery that started with the opening of stores in Q2 was amplified on the back of a large pent-up demand, strong festive spirit and a concentrated wedding season, the company said. This also led to a further upsurge in sales. Q3FY21 sales were more than double of Q2FY21. It delivered a consolidated EBITDA of ₹422 crore.
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JMFL Securities has maintained a Buy rating with a target price of ₹205.
“Our intrinsic value presents a decent upside, but that is likely theoretical if shocks on M&As and balance sheet fronts keep cropping up every now and then,” it said.
Emkay has also maintained a Buy rating with a target price of ₹190.
“ABFRL’s operating performance was better than estimates, driven by robust margin performance. Revenue decline of ~20% YoY was largely in line. EBITDA beat estimates by 15 per cent. Margins expanded 180bps YoY despite lower sales,” it said.
“We raise FY22/23 EBITDA estimates by 3-4 per cent on stronger cost savings. Improved margin profile, reduced debt levels and strong growth plans should drive a healthy CAGR in EBITDA/EPS through FY23E,” it said.
Anand Rathi Shares & Stock Brokers also maintained a Buy rating on the stock with an updated target price of ₹206.
“With debt being brought down and expansion plans accelerating, we believe the company is on track to resume its growth trajectory. We raise our FY22/FY23 revenue 3.5 per cent/3.8 per cent,” said their report.