Anand Rathi's research report on Aditya Birla Fashion and Retail
Despite Covid’19 disruptions in Jan’22, ABFRL reported healthy revenue and margin growth in Q4 FY22. Its FY22 performance was good on the back of easing Covid’19 restrictions, investments in network expansion, inorganic acquisitions and e-commerce. Focusing on long-term strengthening of its balance sheet so that its expansion over the next 3-5 years is not hampered, it approved raising Rs22bn through a primary issue to GIC. It plans to use this capital to accelerate its growth engine built around its current brands. We raise our FY23e/24e capex to ~Rs6.5-7bn, and, hence our revenue assumption 6%/10% over FY23/24.
Outlook
We reduce our FY23e/24e EBITDA margin to 15%/15.3% as we factor in more marketing spends, higher other overheads and investments. We factor in revenue/ EBITDA CAGRs of ~34%/42% over FY22-24. We retain our Buy rating with a TP of Rs358 on ~17x FY24e EV/EBITDA (Rs353 earlier).
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