Buy Aditya Birla Fashion and Retail, target price Rs 224: Edelweiss

Edelweiss has buy call on Aditya Birla Fashion and Retail (ABFRL) with a target price of Rs 224. The current market price of Aditya Birla Fashion and Retail is Rs 203.15.

Aditya Birla Fashion and Retail, incorporated in the year 2007, is a large cap company with a market cap of Rs 18,851.25 crore, operating in retail sector.

Aditya Birla Fashion and Retail key products/revenue segments include apparels, homemart & accessories, other services, commission, scrap, export incentives and other operating revenue for the year ending 31-Mar-2020.


Investment rationale
The brokerage says ABFRL is targeting 15 per cent/23 per cent growth in revenue/EBITDA over FY20–26E with a cumulative FCF of Rs 20 billion. Through its brand portfolio, ABFRL remains a strong structural story and has execution prowess to deliver. Flawed capital allocation remains a key risk though.

Financials
For the quarter ended 31-12-2020, the company has reported a consolidated total income of Rs 2,133.14 Crore, up 82.11 per cent from last quarter's total income of Rs 1,171.32 crore and down 17.87 per cent from last year same quarter's total income of Rs 2,597.34 crore. Company has reported a net profit after tax of Rs 58.44 crore in latest quarter.

Promoter/FII Holdings
Promoters held 70.4 per cent stake in the company as of Dec 30, 2020, while FIIs held 2.6 per cent, DIIs 12.3 per cent and public and others 14.6 per cent.