Aditya Birla Lifestyle Brands Limited

Aditya Birla Lifestyle Brands Limited reported a robust Q3 FY26, with overall revenue growing 10% year-on-year to INR2,343 crores. This growth was achieved despite demand moderation in December due to shifts in the wedding calendar. Consolidated EBITDA increased by 21% to INR431 crores, leading to a significant 180 basis points expansion in EBITDA margin, reaching 18.4% for the quarter. Normalized PAT saw a substantial 66% growth, reaching INR100 crores.

The Lifestyle Brands segment delivered a 9% year-on-year growth, with revenue of INR2,002 crores and a healthy EBITDA margin of 20.6%. This segment also recorded a 5% like-to-like growth. Emerging Businesses demonstrated strong momentum, growing 13% year-on-year, with profitability improving by 790 basis points. Within Emerging Businesses, Reebok achieved over 20% growth and expanded its network to over 200 stores, while American Eagle and Van Heusen Innerwear also posted double-digit growth, with the latter significantly reducing losses.

The company continued its aggressive store expansion, adding approximately 90-plus stores during the quarter, bringing the total footprint to over 3,300 stores across more than 785 cities. Management expects to add another 90-plus net stores in Q4 FY26, totaling about 150 new stores for the fiscal year. A pipeline of 120-300 locations has been identified for the next fiscal year, signaling continued significant expansion. This expansion is a key driver for future sales growth and market penetration.

Net debt reduced to INR800 crores by December end from INR1000 crores in September end. The company clarified that a recently approved INR500 crores NCD issuance is for refinancing existing debentures repaid in January, not for fresh borrowing. Capex for FY26 is projected to be north of INR300 crores, with approximately 80% allocated to Lifestyle Brands for expansions, renovations, and store upgrades. Management aims to reduce net debt by another INR75-100 crores in the near term and targets zero net debt within the next three years.

Demand was strong in October and November but moderated in December due to a shift in the wedding calendar, with most weddings occurring earlier in the quarter. January saw an encouraging rebound post-Makar Sankranti. Regarding GST changes, the company noted a small net negative impact overall. While some brands like Peter England and Reebok apparel benefited, wedding-related categories experienced a negative impact due to a tax rate increase from 12% to 18%.

The Innerwear business showed a strong recovery with double-digit growth and a sharp decline in losses, driven by robust retail like-to-like growth exceeding 30%. Management attributes this turnaround to fine-tuning the retail model, product innovations, and improved inventory freshness. The company is hopeful that the Innerwear business will achieve profitability within one quarter next year, marking a significant milestone in its path to break-even.

Reebok delivered over 20% growth in Q3 FY26, with its network doubling since acquisition to over 200 stores. Management sees significant headroom for exponential growth in Reebok, driven by product assortment improvements, including a strong line of performance footwear and apparel. The brand's appeal is further boosted by the growing health and fitness trend, positioning it for aggressive expansion in the coming years.