Aditya Bir. Fas.

Aditya Birla Fashion and Retail Limited reported consolidated revenue of INR 4,305 crores for Q3 FY25, marking a 3% year-on-year growth. Consolidated EBITDA stood at INR 683 crores, growing 13% YoY, with the EBITDA margin expanding to 15.9% from 14.5% in the prior year. Despite these operational improvements, the company recorded a consolidated PAT loss of INR 42 crores, though this was an improvement from a loss of INR 108 crores in the same quarter last year. Year-to-date figures show revenue of INR 11,376 crores (7% YoY growth) and an EBITDA margin of 13.2%.

The demerger of the western wear brands business into Aditya Birla Lifestyle Brands Limited (ABLBL) is progressing well and is expected to be completed within the next 2-3 months, with the NCLT hearing scheduled for the third week of March 2025. ABFRL successfully secured USD 490 million (approximately INR 4,000 crores) in equity capital through a mix of QIP and preferential issue. Post-demerger, ABLBL is projected to start with an opening debt of INR 700 crores, while the demerged ABFRL will have a cash balance of INR 1,300-1,500 crores, with a target for ABLBL to become debt-free in the next 2-2.5 years.

The proposed ABLBL segment reported INR 2,151 crores in revenue with a 16.5% EBITDA margin, driven by a 12% retail LTL growth in Lifestyle Brands. The demerged ABFRL segment achieved 3% YoY revenue growth to INR 2,218 crores and an EBITDA margin of 14.4%, a 250 bps increase from the previous year. The Ethnic business demonstrated strong performance with a 7% YoY revenue growth to INR 588 crores and a significant 1,160 bps EBITDA margin expansion, reaching 19.2%. This was notably supported by Tasva, which recorded over 50% YoY sales growth and achieved positive EBITDA for the first time.

Pantaloons' revenue for the quarter was INR 1,305 crores, achieving a 19.3% EBITDA margin, reflecting a 170 bps improvement YoY. The brand is executing a strategic shift towards premiumization, which involved exiting over 40 less productive stores in the last 12 months, primarily in Tier 2 and smaller markets. Future expansion for Pantaloons will concentrate on metros, mini-metros, and Tier 1 towns, while the value-segment Style Up format, currently operating 39 stores, is planned for independent expansion, targeting approximately 50 new stores next year.

TMRW, ABFRL's digital brand portfolio, continued its strong trajectory with 26% sales growth YoY and improved margins, validating the potential of digitally native brands. The company aims to sustain a 25-30% organic growth rate for TMRW and plans a fundraise for this segment within the next 9-12 months, having already invested around INR 1,000 crores. Across the ABLBL portfolio, an aggressive expansion is planned with over 300 new stores expected to be rolled out in the next 12 months, including targets of 40-50 new Tasva stores and doubling Style Up's store count next year.

The company operated in a challenging consumption environment characterized by subdued overall consumption and inconsistent footfalls outside of festive and wedding seasons. Management's strategy focused on driving operational efficiencies, leveraging existing assets, and strategic capital deployment. This included rationalizing distribution channels, tightening inventory management, and reducing operating costs. The phasing out of the unprofitable Forever 21 offline operations is also expected to have a positive impact on EBITDA.