Aditya Bir. Fas.

Aditya Birla Fashion and Retail Limited reported a strong Q1 FY26, with revenue increasing 9% year-on-year to INR1,831 crores. This growth was fueled by robust performance across key segments, particularly ethnic wear and the TMRW portfolio. EBITDA saw a significant jump of 38% year-on-year, reaching INR169 crores, indicating improved profitability and operational efficiency despite a cautious market backdrop. The company's focus on disciplined execution and margin resilience was highlighted as a key driver of this performance.

The ethnic business segment delivered a stellar performance, with revenue growing 25% year-on-year to INR436 crores, making it one of the highest growth rates across the portfolio. Profitability showed a sharp uplift, with EBITDA margin expanding by 1600 basis points compared to the previous year. This growth was attributed to strong LTL growth across most brands, a robust wedding season, and sustained demand for occasion wear. The designer-led ethnic portfolio, including Sabyasachi and Tarun Tahiliani, delivered an exceptional 79% year-on-year growth in Q1.

The Pantaloons segment reported revenue of INR1,094 crores. While like-for-like (LTL) growth remained flat, management noted that adjusting for the shift of Eid, normalized LTL would be -3%. Despite this, Pantaloons delivered an EBITDA margin of 18% plus, underscoring the consistent strength of its retail operations and disciplined cost management. The value retail format, Style Up, continued its strong growth trajectory, expanding to 49 stores and posting a robust 36% revenue growth.

The TMRW portfolio grew by 38% year-on-year in Q1 FY26, driven by an expanded product portfolio and enhanced focus on D2C channels. TMRW secured its first external investment of INR437 crores from ServiceNow Ventures, which acquired an 11% stake. This fundraise is expected to enhance TMRW's speed to market and consumer experiences. Management indicated that TMRW is not yet cash flow or EBITDA positive, with losses marginally increasing this quarter, but aims for EBITDA breakeven by FY29.

ABFRL is strategically evolving its store networks. For Pantaloons, the company has completed a network correction and plans to focus on net store additions of larger, more modern stores from next year onwards, after a marginal increase this year. TCNS, following a successful turnaround, is expected to see 30-40 store additions in the second half of this year, with more rapid expansion in the next fiscal year. Tasva plans to add about 40 stores this year, aiming for 90 stores by year-end and 200 stores over the next three years, with a measured approach to maintain brand premiumness.

The company's overarching strategy remains focused on driving profitability through disciplined execution and operational efficiency across its diverse portfolio. Management noted that the broader market sentiment remains cautious, but ABFRL is well-positioned to capture demand during the festive season with compelling product stories and enhanced retail experiences. The goal is to achieve portfolio-level post-Ind AS EBITDA margins north of 20% for the ethnic business and improve Pantaloons' profitability by another 300-500 basis points.