ABFRL - Aditya Bir. Fas.

📊 NSE: ABFRL 🏢 Textiles - Products 📅 Last Updated: 12/13/2025 17:53

💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, consolidated revenue grew 13% YoY to INR 1,982 Cr. Segmental growth was led by TMRW at 27% (INR 222 Cr), Ethnic Businesses at 11% (INR 505 Cr), and Pantaloons at 6% (INR 1,142 Cr). For H1 FY26, total revenue reached INR 3,813 Cr, an 11% increase YoY.

Geographic Revenue Split

Not disclosed in available documents, though localized disruptions in East India during the Pujo week were noted to have moderated sales momentum in Q2 FY26.

Profitability Margins

Consolidated EBITDA margin for Q2 FY26 was 5.9%, a decline from 6.2% in the previous year due to a 200 bps increase in marketing spend. However, H1 FY26 margins improved by 85 bps to 7.5% (EBITDA of INR 286 Cr). Pantaloons segment margin stood at 13.7% in Q2 FY26, while Ethnic businesses improved from -3.1% to -0.3%.

EBITDA Margin

Q2 FY26 EBITDA margin was 5.9% (INR 116 Cr), representing a 7% growth in absolute EBITDA. The margin was impacted by higher brand-building investments. Ethnic business margins improved by 280 bps YoY due to better operating leverage.

Capital Expenditure

Planned capital expenditure is estimated at INR 200-250 Cr per annum for the medium term to support store additions and digital brand ramp-ups.

Credit Rating & Borrowing

Crisil Ratings maintains a 'Stable' outlook. The company has strong financial flexibility following a Jan 2025 equity raise of INR 4,239 Cr. Debt repayment obligations are projected at INR 500-600 Cr per annum.

⚙️ Operational Drivers

Raw Materials

Not disclosed in available documents; however, inventory management and 'inventory markdown management' are cited as critical cost drivers for the apparel business.

Capacity Expansion

Current retail network stands at 1,190 stores spanning 7.5 million square feet as of Q2 FY26 end, with 30+ new store additions during the quarter. Pantaloons closed 30+ unprofitable stores in the last 18 months to optimize the portfolio.

Raw Material Costs

Not disclosed as a specific percentage of revenue, but inventory write-downs of slow-moving stock materially impacted profitability in FY24 and FY25. Better inventory markdown management contributed to a 390 bps margin expansion in the Pantaloons division.

Manufacturing Efficiency

Efficiency is driven by 'superior merchandising' and 'better inventory markdown management,' which led to a 300-390 bps margin expansion in the Pantaloons segment.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

Growth will be achieved through the scale-up of key ethnic brands (TASVA, TCNS), fast fashion via 'Style-up', and the ramp-up of digital-first brands under the TMRW venture. The demerger into two independent entities (ABLBL and ABFRL) is designed to unlock value and allow focused capital allocation.

Products & Services

Apparel (ethnic, value, and premium), beauty products (Lovechild), luxury retail experiences, and digital-first fashion brands.

Brand Portfolio

Pantaloons, TASVA, TCNS (W, Aurelia, Wishful), Lovechild - House of Masaba, Style-up, The Collective, WROGN, and TMRW.

New Products/Services

Expansion into luxury play and beauty (Lovechild) and the scaling of the TMRW digital portfolio, which now has an Annual Revenue Run-rate (ARR) of over INR 1,050 Cr including WROGN.

Market Expansion

Focus on scaling ethnic brands and 'Style-up' stores, alongside strengthening the omni-channel presence which reached a 15% digital share of business in Q2 FY26.

Market Share & Ranking

ABFRL is positioned as one of the leaders in the domestic apparel sector with a strong retail presence.

Strategic Alliances

Strategic investment from GIC Singapore (INR 2,195 Cr) and a stake sale to Flipkart (INR 1,500 Cr). Recent preferential issue subscribed by Pilani Investment and Industries Corporation Ltd (INR 1,298 Cr).

🌍 External Factors

Industry Trends

The industry is shifting toward digital-first brands (TMRW grew 32% YoY) and premiumization/luxury play. Ethnic wear is seeing high traction with >20% like-to-like growth.

Competitive Landscape

Intense competition in the Indian apparel retail sector from both domestic and international players.

Competitive Moat

Moat is built on being part of the Aditya Birla Group, providing superior financial flexibility and access to capital. The diverse brand portfolio across value, ethnic, and luxury segments creates a wide competitive net.

Macro Economic Sensitivity

Highly sensitive to discretionary spending cycles; revenue growth slowed significantly from Q4 FY23 due to muted demand amid a large base from the previous fiscal.

Consumer Behavior

Shift toward omni-channel shopping; Pantaloons and The Collective are seeing strong omni-channel traction, with digital business now 15% of the total portfolio.

⚖️ Regulatory & Governance

Industry Regulations

The retail sector is subject to environmental norms regarding water and emissions; the company maintains a Lost Time Injury Frequency Rate (LTIFR) of 0.03 for employees.

Environmental Compliance

ESG focus is on low emissions and water consumption. ABFRL's commitment to ESG is cited as a key factor in enhancing stakeholder confidence for capital market access.

Taxation Policy Impact

Tax expenses for Q2 FY26 were INR 38 Cr on a loss before tax of INR 333 Cr.

⚠️ Risk Analysis

Key Uncertainties

High debt levels from recent large acquisitions (TCNS, etc.) and the potential for continued muted discretionary demand which could delay the profitability ramp-up of new brands.