Earnings Outlook
Aditya Birla Fashion to report loss for fifth straight qtr
This story was originally published at 17:11 IST on 5 November 2024
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By Jahanvi Kothari
MUMBAI – Aditya Birla Fashion and Retail Ltd. is expected to report a consolidated net loss for the fifth consecutive quarter in Jul-Sept on soft demand for lifestyle brands and fashion, analysts have said. While the company started its end-of-season sale a little early, demand remained muted, analysts said.
The retail company’s consolidated net loss is likely to rise to INR 1.9 billion in the September quarter from INR 1.8 billion a year ago. In Apr-Jun, the company posted a net loss of INR 1.6 billion. Nuvama expects the bulk of the company’s growth to be driven by new acquisitions, including TCNS.
The company is expected to report a top line of INR 36.5 billion for Jul-Sept, 13.0% higher on year and 6.6% higher sequentially, according to the average of estimates from seven brokerages.
Kotak Institutional Securities expects overall revenue growth of 15.5% on year on account of 4.7% on-year growth in Madura brands, 7.1% on-year growth in Pantaloons, and much higher growth in the company’s ethnic business and ramp-up of TMRW (the tech-led "house of brands" venture by the Aditya Birla Group). Growth in the ethnic segment is expected on account of the company’s new acquisitions, including TCNS, analysts said.
Of the seven broking firms, Motilal Oswal Financial Services Ltd. has the highest net loss estimate of INR 2.5 billion, while Axis Securities has the lowest net loss estimate of INR 570 million. Kotak Institutional Equities has estimated the highest net sales of INR 37.25 billion, while Nuvama Wealth Management Ltd. has estimated the lowest of INR 36.14 billion.
The company is expected to report earnings before interest, taxes, depreciation, and amortisation of INR 3.8 billion, according to the average of estimates from five brokerages. Motilal Oswal expects the consolidated EBITDA margin to contract slightly to 9.6% on year. This is on account of the lower margins of Aditya Birla Lifestyle Brands Ltd. However, the EBITDA margin of the parent company is expected to improve going forward.
Axis Securities expects the EBITDA margin to remain flat at 10.3% as the company’s cost-cutting initiatives are largely done. Kotak Institutional Securities expects the company’s cost-cutting initiatives to be partly offset by tepid sales and full consolidation of TCNS into the company, which would lead to sluggish margins.
Analysts at Nuvama said markdown management continues to be Aditya Birla Fashion and Retail's focus, keeping inventory under control. Sharekhan Ltd. prefers the company in the retail space owing to its focus on enhancing shareholder value through restructuring.
Motilal Oswal expects the company's store additions in the September quarter to have remained subdued, but sees it skewing higher in the rest of the financial year. Going ahead, Axis Securities would focus on the demand outlook for the company in the metro cities and tier-2 and tier-3 towns. The brokerage would also focus on the company's store expansion guidance.
The company, which houses brands such as Louis Philippe, Van Heusen, and Pantaloons, will report its quarterly earnings Thursday. On Tuesday, shares of the company closed 2.2% higher at INR 302.30 on the National Stock Exchange.
Following are the Jul-Sept earnings estimates for Aditya Birla Fashion and Retail, based on reports from seven brokerages, in INR million:
Brokerage | Net sales | Net profit | EBITDA |
Anand Rathi Share and Stock Brokers Ltd. | 36,168.00 | (-)1,777.00 | |
Antique Stock Broking Ltd. | 36,258.00 | (-)2,395.00 | 3,229.00 |
Axis Securities Ltd. | 37,100.00 | (-)570.00 | 3,830.00 |
Kotak Institutional Equities | 37,250.00 | (-)2,132.00 | 3,837.00 |
Motilal Oswal Financial Services Ltd. | 36,510.00 | (-)2,483.00 | 3,490.00 |
Nuvama Wealth Management Ltd. | 36,136.00 | (-)1,365.00 | 3,833.00 |
Sharekhan Ltd. | 36,380.00 | (-)2,390.00 | |
Average | 36,543.14 | (-)1,873.14 | 3,643.80 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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