Aditya Birla Fashion and Retail Limited — Q1 FY26 earnings call

Call held 14 Aug 2025

Management summary

Aditya Birla Fashion and Retail Limited reported a robust Q1 FY26, with revenue growing 9% to INR1,831 crores and EBITDA surging 38% to INR169 crores. This performance was largely driven by the strong growth in ethnic wear (25% Y-o-Y revenue, 1600 bps margin expansion) and the TMRW portfolio (38% Y-o-Y growth). While Pantaloons maintained strong margins, its like-for-like growth was flat. The company continues to focus on profitability and strategic expansion in high-potential segments amidst a cautious market backdrop.

Highlights

  • Overall revenue grew 9% Y-o-Y to INR1,831 crores, driven by strong performance in key segments.

  • EBITDA increased significantly by 38% Y-o-Y to INR169 crores, supported by strong ethnic business expansion.

  • Ethnic business delivered a stellar performance with 25% Y-o-Y revenue growth and 1600 bps EBITDA margin expansion.

  • TMRW portfolio showed strong organic growth of 38% Y-o-Y, capturing emerging consumer segments.

  • Pantaloons maintained an EBITDA margin of 18% plus, demonstrating resilience despite a challenging market.

Concerns

  • Pantaloons LTL growth remained flat this quarter, though normalized for Eid shift it was -3%.

  • TMRW business is not yet cash flow or EBITDA positive, with losses marginally up in absolute terms this quarter.

  • The broader market sentiment remains cautious, and the pace of recovery is gradual.

Key financials

  1. Revenue ₹1,831 Cr +9%YoY
  2. EBITDA ₹169 Cr +38%YoY
  3. EBITDA Margin 9.2%

What they filed

Q1 FY27: revenue up 10.6%, net profit down 6.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,761 2,201 1,719 1,831 1,982 +13%2,374 +8%1,990 +16%2,026 +11%
EBITDA77 293 199 106 62 −19%302 +3%188 −6%111 +5%
Net profit-175 -42 -24 -234 -295 −69%-137 −226%-164 −583%-249 −6%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Pantaloons
    ₹1,094 Cr Revenue17.1% Segmental Margin18% EBITDA Margin0% LTL Growth-3% Normalized LTL Growth (Eid adjusted)
  • Ethnic Businesses
    ₹436 Cr Revenue25% Revenue Growth1,600 bps EBITDA Margin Expansion
  • TMRW
    38% Portfolio Growth

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Overall capex for other businesses ₹300 Cr
    • Galeries Lafayette store (one-time capex) ₹200 Cr
    I think the overall capex plan for other businesses put together will be in the range of about INR300-odd crores. If you add the Galeries Lafayette, it would be INR500 crores for this year and... Yes. That's for this year.
  • Debt Debt disclosed Maturity: long term, falling due in '29,'30
    I have cash of around INR1,900 crores and a borrowing, which is INR750 crores for -- this is long term, falling due in '29,'30. We have adequate cash for the future expansion plans. That remaining on TMRW, which also will get offset by the current fundraise. So that number will move significantly post this fundraise. And there is debt lying in some of the ethnic subsidiaries. That's maybe another INR600 crores. Without TMRW, it is not more than INR200 crores.
  • M&A TMRW Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    ServiceNow Ventures invested in TMRW, leveraging ServiceNow AI platform to enhance speed to market and consumer experiences.

    ServiceNow Ventures acquired an 11% stake in TMRW for INR437 crores.

    TMRW gets first investment of INR437 crores from ServiceNow Ventures in its current round of external fundraise, leveraging the ServiceNow Al platform. TMRW, it's early double-digit stake that ServiceNow Ventures has invested in for their INR437 crores. It's 11-odd percent kind of stake.
  • Liquidity Cash ₹2,070 Cr ABFRL held gross cash of INR2,070 crores as of June 2025. Standalone cash is INR1,900 crores with INR750 crores borrowing.
    As of June 2025, ABFRL held gross cash of INR2,070 crores. I have cash of around INR1,900 crores and a borrowing, which is INR750 crores for -- this is long term, falling due in '29,'30. We have adequate cash for the future expansion plans.

Guidance & targets

Profitability

  • Tasva Breakeven Profitability · FY27 end · High confidence Breakeven
    We think FY '27 end is where we'll get to the breakeven in Tasva.

    — Ashish Dikshit

  • TMRW EBITDA Breakeven Profitability · FY29 · High confidence EBITDA Breakeven
    TMRW, we are looking at FY '29 as the year in which we will try to look at EBITDA breakeven.

    — Ashish Dikshit

  • Pantaloons Margin Improvement Profitability · Medium confidence 300 to 500 bps improvement
    And we think another 300 to 500 basis point improvement in profitability, whether you look at the pre-Ind AS or post-Ind AS is really what we need to deliver in Pantaloons.

    — Ashish Dikshit

  • Ethnic Business Post-Ind AS EBITDA Margin Profitability · Medium confidence north of 20%
    a portfolio level of post-Ind AS EBITDA margins north of 20 percentage what we could look at as why this business is concerned.

    — Ashish Dikshit

Store Count

  • Tasva Store Additions Store Count · this year · High confidence 40 stores
    So Tasva store addition plan is about 40 stores this year, plus/minus a few, but that's really the total store addition plan for this year.

    — Ashish Dikshit

  • Tasva Total Stores Store Count · by the end of this year · Medium confidence 90 stores
    Currently, 40 is perhaps not the right level. So we are currently likely to go closer to about 90 stores by the end of this year.

    — Ashish Dikshit

  • Tasva Total Stores (Medium Term) Store Count · next 3 years · High confidence 200 stores
    As we had mentioned, our goal was to get 200-odd stores over the next 3 years.

    — Ashish Dikshit

  • Tasva Store Additions (Post this year) Store Count · after this year · Medium confidence 75 to 100 stores
    between 75 to 100 stores is pretty much on card.

    — Ashish Dikshit

  • TCNS Store Additions Store Count · second half of this year · Medium confidence 30 to 40 stores
    So you'll start to see perhaps second half of this year, you might see 30 to 40 store addition.

    — Ashish Dikshit

Revenue

  • TMRW Revenue Revenue · by the end of this year · Medium confidence INR1,400-1,500 crores
    So we expect the run rate to be closer to INR1,400 crores to INR1,500 crores by the end of this year.

    — Ashish Dikshit

Growth

  • Ethnic Business Growth Rate Growth · going forward · Medium confidence 20%
    But I would say even going forward, one could imagine a 20% kind of growth rate.

    — Ashish Dikshit

What to watch in Q2 FY26

Tasva Breakeven Progress

FY27 end
Current Still scaling up, not yet profitable
Target On track for breakeven by FY27 end

Why it matters

Tasva is a key growth engine; achieving breakeven is crucial for overall profitability.

We think FY '27 end is where we'll get to the breakeven in Tasva.

Risks & concerns

  • Challenging Market Backdrop and Cautious Demand

    medium

    The broader market sentiment remains cautious, and the pace of recovery is gradual, impacting overall growth.

    Management acknowledged

  • TMRW Not Yet Profitable

    medium

    TMRW is currently not cash flow positive or EBITDA positive, with losses marginally increasing this quarter.

    Management acknowledged

  • Seasonality in Ethnic Business

    low

    The ethnic business benefits significantly from wedding seasons, which are largely in the second half of the year, leading to seasonality in profitability.

    Management acknowledged

Q&A highlights

8 direct
Ethnic Business EBITDA Trajectory and Steady-State Margins Direct
I think designer brand portfolio is quite stable. I would argue in high 20s in post-Ind AS terms to some of them in high 30s is really where the steady-state margin will fit. The premium brand portfolio, which is Tasva is still scaling up. We think FY '27 end is where we'll get to the breakeven in Tasva.

Management provided a detailed breakdown of margin expectations for different sub-segments within the ethnic portfolio and a breakeven timeline for Tasva.

Asked by Aditya Soman

Pantaloons Store Network Strategy and Future Additions Direct
I think we've hit the bottom end in terms of store closures. You are going to start to see net store additions as we go forward. The new store in line with the strategy that Sangeeta had sort of laid down is about opening larger stores.

Clarified the shift from store closures to net additions, focusing on larger, more modern store formats for Pantaloons.

Asked by Aditya Soman

Pantaloons Marketing Spend and Retail Identity Refurbishment Direct
Pantaloons marketing spends are concerned, they have been in the range of 1.5% to 2% historically. At its peak, maybe 2%, 2.5% at the low point, maybe 1%, 1.5%. But typically 1.5% on an annualized basis. Of course, quarter-on-quarter, these numbers look very different. But on an annual basis, I think you could assume a 1.5% kind of base as the number that we have. On the retail ID, about 50% of our network is of the new identity that we are happy with. We will take it slowly over a period of time... over a 3, 4-year period.

Provided historical and future guidance on marketing spend and detailed the phased rollout plan for the new retail identity across the store network.

Asked by Archana Menon

TMRW Capital Allocation and Profitability Trajectory Direct
Our focus currently is on growing what we have. We have a portfolio of very powerful brands. Some of them when we acquired were as low as INR10 crores a year and have grown from INR100 crores to INR200 crores a year. Some brands were INR200 crores have grown to INR300 crores. Some require acceleration, some requires more branding effort. But by and large, it's for acceleration of growth of this business is where the capital will grow.

Explained the strategic use of capital for TMRW, emphasizing organic growth and brand building over acquisitions, and the long-term vision for profitability.

Asked by Kunal Shah

TCNS Network Expansion and Turnaround Direct
So you'll start to see perhaps second half of this year, you might see 30 to 40 store addition. But next year onwards, if this trajectory continues, we're very confident that this improvement is quite structural and strong. We'll start expanding more rapidly next year or the we may start to do towards the second half of this year, but most of the benefit of that will probably come next year.

Management outlined the timeline for TCNS store additions, indicating a cautious but confident approach to expansion following a successful turnaround.

Asked by Gopal Nawandhar

Pantaloons Same-Store Sales Growth and New Identity Impact Direct
I think for us, the more important thing is to figure out profitability. If we figure out profitability, right, I won't worry about other pieces. So the intermediate metrics don't define the end outcome. Does every retailer need same-store growth? Absolutely right, Sameer. Is Pantaloons delivering it? I think for quite some time, it's not managed to do that. However, it's a journey. And therefore, as you're seeing it, we'll hopefully start to get that sometimes where some are lead factors and some are lag factors.

Addressed the historical challenge of same-store sales growth in Pantaloons, acknowledging it as a key focus area for improvement with the new retail identity.

Asked by Sameer Gupta

Tasva Store Expansion Pace and Strategy Direct
Currently, 40 is perhaps not the right level. So we are currently likely to go closer to about 90 stores by the end of this year. Hopefully, we'll be able to expand that a little bit faster, but don't want to do it in a hurry. It's not a value format, which you can scale up very easily.

Clarified the measured approach to Tasva's store expansion, balancing rapid growth with maintaining brand premiumness and ensuring profitability.

Asked by Sameer Gupta

Rationale for TMRW Capital Raise Direct
When we launched TMRW in 2021, we talked about that initially ABFRL will fund it, give it some level of investment, allow the business to come to a certain size, and we will get investors, external investors. And over the next 8, 10 years, build a company which can find a very digital native path to this industry... And that's exactly what we've got played out.

Management reiterated that the TMRW capital raise was part of a pre-defined long-term strategy to bring in external investors after initial ABFRL funding, not a sign of lack of confidence.

Asked by Sameer Gupta

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Detailed narrative

Q1 FY26 Performance Overview

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.

Ethnic Business: Stellar Growth and Margin Expansion

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.

Pantaloons: Resilient Margins Amidst Flat LTL Growth

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.

TMRW Business Update and External Fundraise

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.

Strategic Store Network Expansion and Modernization

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.

Profitability Focus and Market Outlook

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.

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