Adtiya Birla Fashion rights opens July 8, payment in 3 tranches like RIL

Issue size Rs 995 crore, closes July 22, ex-date July 1; shareholders can get nine shares for every 77 held

Aditya Birla Fashion and Retail (ABFRL) on Monday announced its Rs 995-crore rights offering will open for subscription on July 8 and close on July 22. The ex-date for the rights issue is set as July 1. The existing shareholders will be eligible to get nine shares for every 77 shares held.

The rights issue price has been set at Rs 110 for one fully paid share of face value Rs 10 — 14 per cent discount to its last closing price of Rs 128.  As many as 90.5 million shares —11.7 per cent of the current equity base — will be issued as part of the rights issue programme.

The rights issue is structured similar to that of  Reliance Industries’ where shareholders will have to make payments in three tranches. Initially, shareholders will have to pay 50 per cent of the issue price — Rs 55 for a partly-paid share of face value Rs 5 each. The second and the third tranches will include payment of Rs 27.5 each in January 2021 and July 2021, respectively.

Currently, the promoter shareholding in ABFRL is 59.07 per cent. The initial outgo for the promoters will be around Rs 294 crore. The promoters have said that they don’t intend to renounce any shares to non-promoters. On the contrary, they intend to subscribe to additional shares to ensure that the issue is subscribed at least 90 per cent. A clutch of mutual funds, including Nippon India, UTI MF, and Franklin Templeton MF, are major public shareholders in the firm.

The firm will soon announce the dates for the trading window.  ABFRL is the apparel retail arm of Aditya Birla Group. Its brand portfolio includes Louis Philippe, Van Heusen, Allen Solly, and Peter England. Currently, the consensus 12-month price for ABFRL is Rs 150.

“On the extended lockdown and higher fixed costs than previously expected, we cut our FY21/FY22 revenue 6.3%/8.3%, Ebitda 44.5%/25.0%. We maintain our 'Buy' rating with a lower target price of Rs 137, based on 18x FY22e EV/Ebitda. We believe the ability to control fixed costs and demand revival are key monitorables,” said a recent note by Anand Rathi.