Aditya Birla Fashion and Retail Limited — Q4 FY26 earnings call

Call held 26 May 2026

Management summary

Aditya Birla Fashion and Retail Limited (ABFRL) reported a strong Q4 FY26, with consolidated revenue growing 16% year-on-year to INR1,990 crores. The Pantaloons segment was a key highlight, achieving 19% revenue growth and 14% like-to-like growth. Excluding one-off items, EBITDA grew 29% with margins at 11.5%, driven by significant margin expansion in the ethnic business. The company continued its strategic store expansion, adding 70 new stores in the quarter, while managing geopolitical uncertainties and inflationary pressures.

Highlights

  • ABFRL posted 16% Y-o-Y growth to reach INR1,990 crores versus INR1,719 crores last year.

  • Pantaloons segment delivered 19% Y-o-Y growth, led by 17% Y-o-Y growth in the core Pantaloons format.

  • TMRW maintained momentum, delivering 45% growth year-on-year.

  • Excluding one-off impacts, EBITDA grew 29% year-on-year with margins at 11.5%.

  • Ethnic business margin specifically saw a big expansion of 390 basis points year-on-year, mainly due to reduction in TCNS losses.

Concerns

  • Reported loss for the quarter stood at INR164 crores, including a one-time exceptional charge of INR11 crores related to the wage code.

  • Market began to see the emergence of certain disruptions in the context of the geopolitical uncertainties towards the end of the quarter.

  • Experiencing 3% to 4% sort of inflationary pressure as far as raw materials is concerned, potentially leading to price increases between 5% to 8% in the second half of the year.

Key financials

  1. Revenue ₹1,990 Cr +16%YoY
  2. EBITDA Margin (Adjusted) 11.5%
  3. Reported Loss (PAT) ₹-164 Cr
  4. Adjusted Loss (PAT) ₹-235 Cr
  5. Gross Cash (Consolidated) ₹1,545 Cr
  6. Gross Debt (Consolidated) ₹1,695 Cr

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
    ₹1,048 Cr Revenue (Q4)17% Core Format Growth (Q4)14% Like-to-like Growth (Q4)15.5% EBITDA Margin (Q4)18% EBITDA Margin (FY)399 stores Store Count
  • Ethnic Business
    ₹2,227 Cr Annual Revenue (FY26)3% Growth (Q4)10.8% EBITDA Margin (FY26)16% Like-to-like Growth (FY26)680 stores Store Count
  • TCNS (within Ethnic)
    7% Like-to-like Growth (Q4)10% Like-to-like Growth (FY26)-1% Revenue (FY26)
  • Tasva (within Ethnic)
    30% Overall Growth (FY26)20% Like-to-like Growth (FY26)94 stores Store Count
  • OWND
    79 stores Store Count12 stores New Stores (Q4)34 stores New Stores (FY26)
  • TMRW (Digital Brands)
    45% Growth (Q4)120 stores Store Count₹800 Cr Cash on Books
  • Luxury Retail
    49 stores Mono-brand Stores

Capital allocation

high confidence
  • Capex ₹450 Cr
    • Towards capex ₹450 Cr
    • One-time investment in GL and OWND rebranding ₹200 Cr
    As we aggressively ramped up our new businesses during this quarter -- during this year, we consumed totalling to around INR1,000 crores, INR300 crores towards working capital, INR450 crores towards capex and infused INR250 crores in our ethnic subsidiaries. In FY '26, our investments were high due to onetime investment in GL and we rebranded OWND, which aggregate to INR200 crores.
  • Debt Gross ₹1,695 Cr
    The gross debt at consolidated level is INR1,695 crores and standalone level is INR748 crores.
  • Liquidity Cash ₹1,545 Cr Standalone cash of INR1,150 crores is available, sufficient for next 2 years. TMRW has INR800 crores cash post recent funding.
    As of March 2026, ABFRL had gross cash of INR1,545 crores at the consolidated level, while gross cash at the standalone level stood at INR1,144 crores. ... TMRW is now adequately funded with INR800 crores cash to pursue its aggressive growth plans. ... I have roughly INR1,150 crores cash available with me, which is sufficient for next 2 years' cash.

Guidance & targets

Profitability

  • TMRW Portfolio Profitability Profitability · FY29 · High confidence Profitable
    we had indicated FY '29 as the year in which we expect that TMRW as a portfolio level, some of all brands to become profitable.

    — Ashish Dikshit

  • Tasva Breakeven Profitability · FY28 · High confidence Breakeven
    The profitability will take some time. We had said FY '28, and we still feel that's the right assessment at this point as well.

    — Ashish Dikshit

  • TCNS Breakeven Profitability · End of FY27 · High confidence Breakeven
    We'll probably towards the end of FY '27 is when we would expect to breakeven. And on a full year basis, definitely be profitable by FY '28 onwards.

    — Ashish Dikshit

Inflation

  • Raw Material Inflation Inflation · Near term · High confidence 3% to 4%
    We are experiencing something like 3% to 4% sort of inflationary pressure as far as raw materials is concerned.

    — Ashish Dikshit

Price Increases

  • Price Increases Price Increases · Second half of the year · Medium confidence 5% to 8%
    effectively, it would sort of put pressure in the second half of the year to take to fully counter it, take price increases between 5% to 8% depending on the category.

    — Ashish Dikshit

Store Expansion - Pantaloons

  • New Store Additions Store Expansion - Pantaloons · This financial year (FY27) · High confidence 20-22 stores
    though the plan for this financial year is about 20, 22 stores, I think as we get more confident, we will look at some point of time to step up this agenda and accelerate our store expansion.

    — Sangeeta Tanwani

Store Expansion - OWND

  • New Store Additions Store Expansion - OWND · This year (FY27) · High confidence 20 to 35 stores
    this year, we are looking at 20 to 30 or at best 30, 35 stores.

    — Ashish Dikshit

Cash Utilization - Standalone

  • Cash Utilization Cash Utilization - Standalone · FY27 · High confidence INR600 crores
    we are planning to utilize it INR1,000 crores in FY '26, INR600 crores in FY '27 and INR500 crores in '28

    — Jagdish Bajaj

Market context

  • Free Cash Flow (FCF) Profitability · FY29 · High confidence Positive
    post which we aim to be FCF positive in FY '29.

    — Jagdish Bajaj

What to watch in Q1 FY27

Pantaloons New Store Additions

FY27
Current 399 stores (FY26 end)
Target 20-22 new stores

Why it matters

Key indicator of growth strategy execution for a strong performing segment, with potential for accelerated expansion.

though the plan for this financial year is about 20, 22 stores, I think as we get more confident, we will look at some point of time to step up this agenda and accelerate our store expansion.

Risks & concerns

  • Geopolitical Uncertainties

    medium

    Emergence of certain disruptions in the context of geopolitical uncertainties towards the end of Q4.

    Management acknowledged

  • Demand Compression due to Inflation

    medium

    Potential demand compression in the second half of the year due to cost inflation and subsequent price increases (5-8%).

    Management acknowledged

  • Increasing Net Debt

    low

    Concern raised by analyst about increasing net debt given ongoing investments, but management expressed confidence in current capital structure and funding plans.

    Analyst downplayed

  • Rental Costs Impact from Demand Compression

    low

    If demand compression is prolonged, it could lead to compression on the rental side, but not for transient features.

    Analyst acknowledged

Q&A highlights

6 direct
Pantaloons Revenue Growth Drivers Direct
This is really a quarter where we think our strategy that we've been working on for the last 18 months with a concerted set of actions, which are translating into results, which starts from, as Jagdish alluded in his speech, fundamentally defining our target audience in a very sharp manner, strengthening the Pantaloons proposition with a superior customer experience.

Clarifies the sustainability of Pantaloons' strong performance, attributing it to strategic changes beyond just seasonal sales shifts.

Asked by Archana Menon

Inflation and Price Hikes Partial
We are experiencing something like 3% to 4% sort of inflationary pressure as far as raw materials is concerned. Obviously, this is not the entire cost. Raw material is a part of the cost. And therefore, effectively, it would sort of put pressure in the second half of the year to take to fully counter it, take price increases between 5% to 8% depending on the category.

Provides insight into potential future pricing strategies and cost pressures that could affect margins.

Asked by Archana Menon

Demand Sentiment & FY27 Outlook Partial
I think there was a marginal impact in March, which was which slowed down some of the momentum which had built up in the previous 3 to 4 months. But we have seen demand nearly normal for most part of April and going into this quarter. So, as of now, while we feared a significant sort of risk on demand, as of now, we have not seen it play out.

Gives management's near-term outlook on market conditions and potential headwinds, crucial for future growth projections.

Asked by Tejash Shah

Pantaloons LTL Growth & Store Expansion Direct
I think strategy has taken time for all parts of its pieces to come together. As Sangeeta described in her response to Archana's question initially, actually from mid- to late October, almost for last 5 months of the year and going into this year, we are seeing a fairly consistent uptick in almost all measurements. ... I would be more inclined to go with your suggestion of slightly better and more rapid expansion.

Indicates potential upside to previous conservative guidance for Pantaloons, a key segment, and management's increasing confidence.

Asked by Tejash Shah

Company's Cash Flow Situation Direct
So, at the standalone level, we started the year with a gross cash of INR2,100 crores. As stated, we are planning to utilize it INR1,000 crores in FY '26, INR600 crores in FY '27 and INR500 crores in '28, post which we aim to be FCF positive in FY '29.

Addresses concerns about cash burn and funding for growth, providing clarity on the company's financial runway and FCF targets.

Asked by Garima Mishra

Ethnic Business Performance (TCNS & Tasva) Direct
As far as TCNS is concerned, Jagdish in his opening remarks had talked about how the losses have halved this year versus FY '25. We're still not profitable. We'll probably towards the end of FY '27 is when we would expect to breakeven. And on a full year basis, definitely be profitable by FY '28 onwards.

Provides specific timelines and performance updates for key ethnic brands, which are strategic pillars for the company.

Asked by Garima Mishra

OWND Consumer Acceptance & Inflation Impact Direct
So, OWND, as you know, is in a very early phase in a market where there are multiple players between 300 to 1,000 stores. We have just started the journey. So, early stage for us to make conclusive sort of points about it. ... I don't think we will be material beneficiary or material sort of we won't take a significant hit on account of that.

Offers insights into the nascent OWND brand's target market and management's view on its resilience to macro factors like inflation.

Asked by Hemant Shah

TMRW Profitability & Funding Direct
So, we feel the INR800 crores is a substantial amount of cash on a business, which is already on a run rate of INR1,500 crores. If you look at the losses that we report on an annual basis, close to about INR200 crores. So, we feel that there is enough cash lever to both grow the business and with scale, also drive profitability within the brands and the overall ecosystem. So, we feel comfortable with that.

Addresses funding concerns for the high-growth TMRW segment and reinforces confidence in its path to profitability by FY29.

Asked by Kunal Bhatia

3 min read 6 chapters

Detailed narrative

Strong Q4 Performance Driven by Pantaloons and Strategic Shifts

ABFRL delivered a robust Q4 FY26, with consolidated revenue growing 16% year-on-year to INR1,990 crores. The Pantaloons segment was a key highlight, achieving 19% Y-o-Y revenue growth to INR1,048 crores, driven by a 17% Y-o-Y growth in its core format and 14% like-to-like growth. This strong performance is attributed to a strategic shift over the past 18-24 months, focusing on merchandising reset, elevated in-store experience, and sharpened execution, which has strengthened its customer and product proposition.

Underlying Profitability Improvement Despite One-offs

Excluding one-time impacts, such as a INR97 crore inventory write-up in the base quarter and a INR83 crore derivative gain in Q4 FY26, EBITDA grew 29% year-on-year with margins reaching 11.5%. The reported PAT loss for the quarter was INR164 crores, which included a INR11 crore exceptional charge related to the wage code. However, the adjusted PAT loss reduced from INR289 crores last year to INR235 crores this year, highlighting a better underlying operating performance across the portfolio.

Ethnic Business Shows Significant Margin Expansion and Growth

The ethnic business delivered annual revenue of INR2,227 crores in FY26, marking a 14% Y-o-Y growth, and saw its EBITDA margin expand significantly by 560 basis points to 10.8%. Tasva continued its strong growth trajectory with 30-33% overall growth and 20%+ like-to-like growth, reaching 94 stores. TCNS, another key ethnic brand, saw its losses halved compared to FY25, with management targeting breakeven by the end of FY27 and profitability by FY28.

Strategic Store Expansion and Digital Brands Momentum

ABFRL continued its calibrated store expansion, adding around 70 new stores in Q4, bringing the total additions for FY26 to over 180 stores and expanding its retail footprint by 0.6 million square feet on a net basis. The digital brands portfolio, TMRW, delivered 45% Y-o-Y growth in Q4, with narrowing cash losses. TMRW is now adequately funded with INR800 crores cash, including a recent INR500 crore debt funding, to pursue its aggressive growth plans and build its omni-channel presence with 120 stores.

Capital Allocation and Liquidity for Future Growth

For FY27, the company plans to utilize INR600 crores, with INR450 crores allocated for working capital and INR150 crores for capex in subsidiaries. ABFRL maintains a strong liquidity position with INR1,150 crores of standalone cash, which is deemed sufficient for the next two years. Management aims for the company to be Free Cash Flow positive by FY29, with key segments like TMRW, Tasva, and TCNS targeted to achieve profitability by FY29, FY28, and end of FY27 respectively, supported by disciplined capital deployment.

Market Outlook, Inflationary Pressures, and Pricing Strategy

Demand trends remained broadly in line with previous quarters, though geopolitical uncertainties emerged towards the quarter-end. Management anticipates 3-4% inflationary pressure on raw materials, which may necessitate price increases of 5-8% in the second half of the year, depending on the category. While acknowledging potential demand compression, the company remains focused on responding with clarity, speed, and discipline, prioritizing consumer trends and financial discipline in its growth agenda.

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