Aditya Birla Fashion and Retail Limited

Aditya Birla Fashion and Retail Limited reported a consolidated revenue of ₹1982 crores for Q2 FY26, marking a 13% year-on-year growth. Despite this strong top-line performance, consolidated EBITDA grew by a more modest 7%, with margins moderating to 5.9% from 6.2% in the prior year. This margin compression was primarily attributed to increased investments in brand building and marketing, with advertisement spend rising by 200 basis points. The company recorded a PAT loss of ₹295 crores, compared to a normalized loss of ₹277 crores in Q2 last year.

Pantaloons delivered a 6% growth, reaching ₹1142 crores in revenue, supported by a 7% like-to-like growth. The ethnic business portfolio demonstrated robust performance, growing 11% year-on-year to ₹505 crores, with like-to-like growth exceeding 20%. Notably, the ethnic business (excluding TCNS) grew by 34% year-on-year. The designer-led portfolio also saw significant growth of 32% year-on-year, with Sabyasachi and Goodview (Tarun Tahiliani) achieving 39% and 26% like-to-like growth, respectively. The digital brand portfolio, TMRW, grew 27% year-on-year, and luxury retail expanded by 13% year-on-year.

The company launched OWND!, a new Gen Z focused brand, opening its first store in Bengaluru and expanding its footprint to 59 stores with 10 new additions in Q2. OWND! reported a strong revenue growth of 43% year-on-year and is on track to add over 30 stores in H2 FY26. Additionally, ABFRL unveiled its first Galeries Lafayette store in Kala Ghoda, Mumbai, a flagship destination spanning 90,000 square feet, underscoring its luxury play. TMRW successfully raised ₹450 crores during the quarter, completing its capital infusion.

While overall EBITDA margins moderated, the ethnic business sustained its profitable growth trajectory, achieving a 280 basis points year-on-year improvement in margins. TCNS, a key part of the ethnic portfolio, showed strong recovery with 19% like-to-like growth and a 900 basis points margin improvement, driven by improved product performance and retail execution. Management indicated that Pantaloons' segment margin is targeted to be in the 15-17% range, with aspirations for gross margins north of 50%. The higher marketing investments are expected to drive future growth and brand positioning.

Capital expenditure for H1 FY26 was approximately ₹260 crores. For H2 FY26, the company plans to spend an additional ₹100-125 crores primarily on expanding OWND! and Tasva, with around 30 stores each. As of September 2025, ABFRL held gross cash of ₹2150 crores at a consolidated level. Management confirmed that despite cash utilization in H1 due to inventory buildup, the cash availability across all businesses is not a concern, as H2 typically sees higher cash collection due to the seasonal nature of wedding-related businesses.

The ethnic business, particularly wedding-related segments, is heavily loaded in H2, with 70% of revenues and 80-85% of profits expected in this period. Management anticipates TCNS to turn profitable by next year, while Tasva is expected to still incur losses. Regarding the GST increase from 12% to 18% on higher-end ethnic wear, management believes it will not significantly shift consumer behavior towards value options, as customers in this segment prioritize product quality over the marginal price increase.