Aditya Birla Fashion and Retail Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Aditya Birla Fashion and Retail Limited reported an 8% Y-o-Y revenue growth to INR 2,374 crores and a 13% increase in EBITDA to 15.6% margins for Q3 FY26. The ethnic business showed strong margin expansion of 350 basis points to 22.7%, and new businesses grew over 20%. However, the quarter saw a reported loss of INR 141 crores due to a one-time exceptional item and a mixed demand environment, with festive sales shifting to earlier or later quarters impacting reported growth.

Highlights

  • Overall EBITDA grew by 13%, with margins at 15.6% for the quarter compared to 14.9% in the same period last year.

  • Ethnic business continued its consistent margin expansion for the eighth consecutive quarter with Q3 margin reaching 22.7%, up 350 basis points versus last year.

  • All new businesses delivering over 20% growth.

  • Digital brand portfolio TMRW grew by 29% versus last year in Q3, underpinned by strong back-end technology and data science-led capabilities.

  • Net 5.5 lakh square feet of area added over the last 12 months, with 50 new additions during the quarter.

Concerns

  • Reported loss was INR 141 crores, which includes a one-time exceptional item pertaining to new Labor Code this quarter. Normalized loss stood at INR 115 crores versus INR 103 crores last year.

  • Overall demand environment remained mixed with consumption largely centered around festive and wedding-related shopping.

  • A part of the festive season shifted to the previous quarter this year compared to Q3 last year, impacting reported sales growth for masstige and premium brands, and Pantaloons.

Key financials

  1. Revenue ₹2,374 Cr +8%YoY
  2. EBITDA — +13%YoY
  3. EBITDA Margin 15.6%
  4. Reported Loss ₹141 Cr
  5. Normalized Loss ₹115 Cr
  6. YTD Revenue ₹6,187 Cr +10%YoY
  7. YTD EBITDA ₹655 Cr +17%YoY
  8. YTD EBITDA Margin 10.6%
  9. ABFRL (ex-TMRW) YTD EBITDA Margin 15.2%

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
    ₹1,276 Cr Revenue18.2% Margin3% LTL (adjusted)
  • Ethnic Business
    ₹2,200 Cr Annual Sales Run Rate₹703 Cr Q3 Revenue10% LTL22.7% Q3 EBITDA Margin350 bps Q3 EBITDA Margin Y-o-Y Increase
  • Ethnic Business - Design-led segment
    30% Y-o-Y Growth15% LTL Growth
  • Ethnic Business - Tasva
    26% Y-o-Y Revenue Growth8% LTL Growth20% YTD LTL Growth
  • Ethnic Business - TCNS
    0% Overall Revenue Growth8% Q3 LTL Growth10% YTD LTL Growth500 bps Margin Increase50% YTD Pre-Ind AS Losses Decline
  • Luxury Retail (Collective & Mono brands)
    16% Y-o-Y Growth
  • Digital Brand Portfolio (TMRW)
    29% Q3 Y-o-Y Growth₹1,100 Cr Annual Revenue Run Rate12% Q3 Losses as % of Revenue95% Online Channel Contribution (9-month)

Capital allocation

high confidence
  • Capex Capex disclosed
    • Overall capex across business for 9 months (including security deposits) ₹300 Cr
    • Galeries Lafayette store cost ₹125 Cr
    • Galeries Lafayette event/initial launch ₹20 Cr
    Capex across business for 9 months is roughly INR300 crores, including security deposits. ... I think, indicated store cost of about INR130-odd crores, INR125 crores to INR130 crores, and that will go into the depreciation line. ... we would have invested maybe about INR20 crores, INR25 crores in terms of the event, initial launch, the first stage of the business
  • Debt Net ₹600 Cr
    So what I'm trying to say is, firstly, these borrowings are long term in nature. So like I have INR1,600 crores cash with debentures in small WCDL here and there, INR800 crores borrowings, INR800 crores cash. With my subsidiary, there is a more borrowing than the cash they have. So if you see at a net level, I will have around INR600 crores.
  • Liquidity Cash ₹2,100 Cr ABFRL stand-alone cash is around INR 1,600 crores. TMRW has net cash of INR 400-500 crores from fundraise.
    As of December 2025, ABFRL held gross cash of around INR2,100 crores at the same level as end of Q2 FY '26. ... With ABFRL stand-alone, we have around INR1,600 crores cash. ... There is a further -- TMRW, because of the fundraise is sitting on a net cash of about INR400 crores, INR500 crores.

Guidance & targets

Pantaloons Growth

  • LTL Growth Pantaloons Growth · ongoing · Medium confidence mid- to high single-digit
    So we are looking for mid- to high single-digit growth in Pantaloons for LTL and double-digit growth at an overall level, yes.

    — Sangeeta Tanwani

Pantaloons Store Expansion

  • New Stores Pantaloons Store Expansion · next year · Medium confidence 20 stores
    I think about 20 stores is what we would say we need to build in because Gaurav, as Sangeeta had explained, a lot of our premiumization strategy was building around aspirational and experience premiumization, not necessarily significant shift in pricing. So the Pantaloons addressable market hasn't come down.

    — Ashish Dikshit

Pantaloons Store Size

  • New Store Area Pantaloons Store Size · ongoing · High confidence 18,000+ sq ft, up to 25,000-30,000 sq ft
    So we are largely looking at stores in the range of 18,000 plus, going up to 25,000, 30,000 depending on the potential of the market.

    — Sangeeta Tanwani

TCNS Store Expansion

  • New Stores TCNS Store Expansion · next year (from Q4 this year) · High confidence 50-60 stores
    I think from Q4 of this year is when our expansion agenda is changing. I expect that we'll add between 50 to 60 stores next year in TCNS, something that we had held back so far.

    — Ashish Dikshit

TCNS Profitability

  • Breakeven TCNS Profitability · next year (annualized basis) · Medium confidence breakeven
    But on an annualized basis, our breakeven will probably be next year.

    — Ashish Dikshit

Tasva Profitability

  • Breakeven Tasva Profitability · FY28 · Low confidence breakeven
    Tasva, maybe we can expect the breakeven to happen somewhere in FY '28?

    — Gaurav Jogani

Ethnic Business Profitability

  • Profit Trajectory Ethnic Business Profitability · ongoing · Medium confidence improve much faster than revenue growth
    So profit trajectory will continue to improve much faster than the revenue growth.

    — Ashish Dikshit

Galeries Lafayette Profitability

  • Store Profitability (as % of revenue) Galeries Lafayette Profitability · first 2-3 years (steady-state model) · Medium confidence 15-20%
    In steady-state model, we expect the store to make between close to 15% to 20% in first 2, 3 years on the revenue.

    — Ashish Dikshit

  • Store Profitability (as % of revenue) Galeries Lafayette Profitability · long-term · Medium confidence 20%
    We think over the next 3, 4 years, should be able to get to much higher revenue on that. And that's the number on which we look to make about 20% store profitability.

    — Ashish Dikshit

TMRW Profitability

  • Breakeven TMRW Profitability · FY29 · Medium confidence breakeven
    We expect TMRW, as we have mentioned in our various sort of presentations, including investor presentation, to be somewhere between FY '29 is when TMRW should breakeven.

    — Ashish Dikshit

TMRW Online Channel Contribution

  • Online Share of Business TMRW Online Channel Contribution · ongoing · Medium confidence 85%

    Previously 95% → 85%

    But I think from 95%, maybe it will come down to 85%, but these are primarily online first brands.

    — Ashish Dikshit

ABFRL (ex-TMRW) Profitability

  • Pre-Ind AS Profit ABFRL (ex-TMRW) Profitability · next year (full year onwards) · Medium confidence positive profit
    And next year, full year onwards, we should start making pre-Ind AS profit, which will increase post that.

    — Ashish Dikshit

Market context

  • Overall Growth Pantaloons Growth · ongoing · Medium confidence double-digit
    So we are looking for mid- to high single-digit growth in Pantaloons for LTL and double-digit growth at an overall level, yes.

    — Sangeeta Tanwani

  • Growth TCNS Medium Term Outlook · medium term · Medium confidence double-digit
    With these strategic foundations in place, we are entering the next phase of expansion with a healthy store addition plan, targeting double-digit growth and double-digit pre-Ind AS margin over the medium term.

    — Jagdish Bajaj

  • Pre-Ind AS Margin TCNS Medium Term Outlook · medium term · Medium confidence double-digit
    With these strategic foundations in place, we are entering the next phase of expansion with a healthy store addition plan, targeting double-digit growth and double-digit pre-Ind AS margin over the medium term.

    — Jagdish Bajaj

What to watch in Q4 FY26

Pantaloons LTL Growth

Next quarter / ongoing
Current 3% (adjusted for shifts)
Target Mid- to high single-digit

Why it matters

Indicator of underlying business health and effectiveness of premiumization strategy.

So we are looking for mid- to high single-digit growth in Pantaloons for LTL and double-digit growth at an overall level, yes.

Risks & concerns

  • Mixed demand environment

    medium

    Overall demand environment remained mixed with consumption largely centered around festive and wedding-related shopping.

    Management acknowledged

  • Festive season shift impacting sales growth

    medium

    A part of the festive season shifted to the previous quarter this year compared to Q3 last year, impacting reported sales growth for masstige and premium brands, and Pantaloons.

    Management acknowledged

  • Competitive intensity in lower to mid-segment

    medium

    The competitive intensity and overall consumption at the lower to mid-segment of consumption has been more challenging for much of last 12 to 24 months.

    Management acknowledged

  • Intense competitive environment for OWND! business

    medium

    The OWND! business operates in an environment which is fairly intense from a competitive point of view, with many large players entering the space.

    Management acknowledged

  • Reported loss due to one-time exceptional item

    medium

    Reported loss was INR 141 crores, including a one-time exceptional item pertaining to new Labor Code this quarter.

    Management acknowledged

Q&A highlights

7 direct
Pantaloons performance, KPIs, and month-on-month trends Direct
So as Jagdish mentioned that our performance for this quarter actually corrected for the shift of festive actually is at about 3%. The other big shift that happened in this quarter, I'm just giving you first explanation for the growth. Because we had a good autumn/winter and the season was going well and one of the KPIs that we saw improve significantly is our sell-through rates on our merchandise, given all the shifts we've made in our merchandising strategy, we actually decided to shift our EOSS versus last year to quarter 4.

Clarifies the impact of festive season shifts and EOSS deferral on Pantaloons' reported growth, and highlights positive internal KPIs like sell-through rates and new store performance.

Asked by Archana Menon

TCNS store expansion plans for next year Direct
I think from Q4 of this year is when our expansion agenda is changing. I expect that we'll add between 50 to 60 stores next year in TCNS, something that we had held back so far.

Provides specific numerical guidance on future store expansion for TCNS, indicating a shift from consolidation to growth.

Asked by Archana Menon

Profitability profile of designer-led vs premium ethnic businesses and breakeven timelines Direct
TCNS, we have made a big shift. I think as Jagdish in his opening remarks mentioned that profitability has halved in this 9-month period versus last year. We are very close to breakeven this quarter, almost breakeven. ... But on an annualized basis, our breakeven will probably be next year. So as Tasva scales a little bit, Tasva intrinsic margins are very good.

Offers a detailed breakdown of profitability within the ethnic segment, distinguishing between profitable designer-led brands, loss-making Tasva (investing phase), and TCNS (nearing breakeven).

Asked by Gaurav Jogani

Financial impact of Galeries Lafayette on profitability, depreciation, and lease liability interest Partial
And the depreciation impact is around INR10 crores. ... So I say I think we'll figure that number out for one specific piece, but that's the nature of investment that we have made in this concept.

Quantifies the depreciation impact of Galeries Lafayette and clarifies the nature of the investment, though a full profitability impact was not detailed.

Asked by Gaurav Jogani

Pantaloons' lackluster LTL growth despite store closures and marketing investments Direct
I think the competitive intensity and the overall consumption at the lower to mid-segment of consumption has been more challenging for much of last 12 to 24 months. ... Having said that, I agree with you. I think the performance in this segment has been lower than our premium segment or which is lower than the super-premium segment.

Challenges management on a key performance metric (LTL growth) and elicits a response attributing it to competitive intensity and market segment challenges, alongside internal improvements.

Asked by Devanshu Bansal

Risk of market share loss due to deferring EOSS for Pantaloons Direct
Any strategy can backfire, but I think this should give you a sense of confidence that we have got to in our merchandising cycle in this business. It's taken us some time and a fair bit of understanding of business. You can be sure we have sort of thought deeply about it. It's a very difficult -- as you're rightly alluding, it's a different call -- difficult call.

Addresses a strategic decision (EOSS deferral) and management's rationale, acknowledging the risk but expressing confidence in its long-term benefit for margins.

Asked by Sameer Gupta

Net cash numbers for the company (consolidated) Direct
So what I'm trying to say is, firstly, these borrowings are long term in nature. So like I have INR1,600 crores cash with debentures in small WCDL here and there, INR800 crores borrowings, INR800 crores cash. With my subsidiary, there is a more borrowing than the cash they have. So if you see at a net level, I will have around INR600 crores.

Clarifies the consolidated net cash position, providing a clearer picture of the company's overall liquidity and debt structure.

Asked by Sameer Gupta

TMRW's online channel contribution to revenue Direct
I think 95% of the business. While we have started to open stores, but even now at a 9-month level, 95% of the business. We don't expect this to remain at this level. I think as these brands are finding traction in offline, we'll bring that share down. But I think from 95%, maybe it will come down to 85%, but these are primarily online first brands.

Provides a specific metric on TMRW's channel mix and indicates a future shift towards a higher offline contribution as brands gain traction.

Asked by Garima Mishra

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

Aditya Birla Fashion and Retail reported an 8% year-on-year revenue growth, reaching INR 2,374 crores in Q3 FY26. Overall EBITDA increased by 13%, with margins improving to 15.6% from 14.9% in the prior year. Despite a mixed demand environment and shifts in festive season timing, the company recorded a reported loss of INR 141 crores, which included a one-time exceptional item, with normalized loss at INR 115 crores versus INR 103 crores last year.

Strategic Shifts and Performance in Pantaloons

The Pantaloons segment reported INR 1,276 crores in revenue with an 18.2% margin. Management noted that adjusting for festive and EOSS shifts, like-for-like (LTL) growth stood at 3%. The refreshed strategy, focusing on premiumization and moving away from value-led fashion, is showing early success, particularly in women's western wear and non-apparel categories, with new stores outperforming the network. The average selling price has increased by 2-3% due to this premiumization strategy.

Ethnic Business Growth and Margin Expansion

The ethnic portfolio achieved INR 703 crores in Q3 revenue, a 20% year-on-year growth, with LTL growth at 10%. The segment's EBITDA margin expanded by 350 basis points year-on-year to 22.7%. Tasva continued its strong trajectory with 26% Y-o-Y revenue growth and 8% LTL growth, while TCNS, after store rationalization from 650 to 480 stores, delivered 8% LTL growth and saw margins improve by approximately 500 basis points, with pre-Ind AS losses declining over 50% YTD.

Digital Brands (TMRW) and Luxury Retail

The digital brand portfolio, TMRW, grew by 29% year-on-year in Q3, achieving an annual revenue run rate of INR 1,100 crores, with Wrogn showing improving profitability trends. The luxury retail segment, including Collective & Mono brands, delivered 16% year-on-year growth. Galeries Lafayette, the first flagship luxury departmental store, commenced operations in November 2025 and has shown strong early traction, with an investment of INR 125-130 crores for store setup and INR 20-25 crores for initial launch.

Capital Allocation and Liquidity

As of December 2025, ABFRL held gross cash of approximately INR 2,100 crores. Capital expenditure for the first nine months of FY26 was around INR 300 crores, including security deposits. The company's stand-alone cash was INR 1,600 crores, with approximately INR 800 crores in long-term debt. Including subsidiaries, the consolidated net cash position was around INR 600 crores.

Outlook and Strategic Direction

Management guided for mid- to high single-digit LTL growth and double-digit overall growth for Pantaloons, with plans to add around 20 larger stores annually. TCNS is expected to add 50-60 stores next year and achieve breakeven on an annualized basis by FY27. ABFRL, excluding TMRW, is projected to achieve positive pre-Ind AS profit next year, while TMRW aims for breakeven by FY29. The company remains focused on driving profitability and network expansion across all businesses, with TMRW's online contribution expected to shift from 95% to 85% as offline traction grows.

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