ABFRL: Multiple headwinds likely in near term, investors advised caution

Rs 1,000-cr rights issue, lower costs to help pare Rs 2,500-cr debt

The Aditya Birla Fashion Retail (ABFRL) stock jumped 9 per cent on Thursday after the firm announced deleveraging and cash generation plans that include a rights issue, liquidating inventory, and cutting capital expenditure by 60-70 per cent in FY21.

Net debt, which had decreased from Rs 1,891 crore in FY18 to Rs 1,645 crore in FY19, surged to Rs 2,516 crore in FY20. This was driven by the higher inventory build-up on account of Covid-19, rise in working capital requirements due to business growth, short payments cycle to vendors, and spend on acquisitions.
 

The firm is looking to raise Rs 1,000