Aditya Bir. Fas.

Aditya Birla Fashion and Retail Limited (ABFRL) successfully completed its demerger, creating two independent entities: Aditya Birla Lifestyle Brands Limited (ABLBL) and the demerged ABFRL. This strategic move aims to enable both entities to pursue distinct value-creation journeys. The demerged ABFRL now holds INR2,350 crores in cash, providing a strong balance sheet to fund aggressive growth across its high-growth platforms.

ABLBL, comprising premium Western wear and lifestyle brands, demonstrated a robust Q4 FY25 performance with normalized revenue growth of 3% to INR1,942 crores and EBITDA growth of 18% to INR330 crores. The normalized EBITDA margin expanded by 200 basis points to 17%. The Lifestyle Brands segment, including brands like Louis Philippe and Van Heusen, achieved 9% like-to-like retail growth and 5% YoY revenue growth to INR1,639 crores, with a 20% EBITDA margin. ABLBL plans an aggressive retail rollout, adding over 300 stores in FY26, with approximately 200 stores driven by own capex.

The demerged ABFRL reported a strong 9% YoY revenue growth to INR1,719 crores in Q4 FY25. Comparable EBITDA more than doubled, growing 103% to INR199 crores, and reported EBITDA stood at INR295 crores with a 17.2% margin. The Pantaloons segment, despite 50+ store closures, achieved an EBITDA margin of 15.1%, a 480 basis point expansion. The Ethnic wear segment grew 19% YoY to INR564 crores, with its EBITDA margin expanding 700 basis points to 10.1%, notably driven by the designer-led portfolio's 46% YoY growth and over 20% EBITDA margin.

Both ABLBL and the demerged ABFRL demonstrated significant margin expansion. ABLBL's normalized EBITDA margin improved by 200 basis points to 17% in Q4 FY25 and 100 basis points to 16.2% for the full year. The demerged ABFRL's comparable EBITDA margin expanded by 220 basis points for the full year to 10.3%. Pantaloons achieved a 480 basis point EBITDA margin expansion, reaching 15.1%, while the Ethnic wear segment saw a 700 basis point expansion to 10.1%.

The demerged ABFRL has a strong cash position of INR2,350 crores, which is deemed sufficient to fund its planned expansion for the next 3-4 years. Ongoing capex for ABFRL is projected at around INR400 crores annually, with an additional INR100 crores for Galeries this year. ABLBL plans approximately INR250 crores in capex for FY26, primarily for retail expansion. ABLBL's net debt stood at INR781 crores at the end of FY25, with expected finance cost reductions of INR50-60 crores next year. ABFRL expects no finance charge this year due to its cash reserves.

ABLBL is positioned to double its scale and expand margins meaningfully over the next 5 years, with 300+ stores planned for FY26. The demerged ABFRL targets a 3x revenue scale-up and 2x margin expansion over the next 5 years. Pantaloons aims for 300 basis point margin improvements in the next couple of years and plans 15-20 new stores in FY26. TCNS is projected to turn pre-Ind AS EBITDA-positive by FY27, and all ABFRL businesses (excluding TMRW) are expected to be EBITDA positive by FY26, with TMRW potentially taking longer.