Aditya Birla Fashion & Retail (ABFRL) rallied 11.93% to Rs 236.95 after the company's board has authorized the management to evaluate vertical demerger of Madura Fashion & Lifestyle business from the company into a separate listed company.
The Madura Fashion & Lifestyle business segment (MFL), consisting of four lifestyle brands such as Louis Phillippe, Van Heusen, Allen Solly & Peter England along with casual wear brands like American Eagle & Forever 21, sportwear brand Reebok and the innerwear business under Van Heusen will be demerged into a separate listed entity.The proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities.
Post demerger, the company will be focused on high-growth segments where there are tailwinds from a shift from unbranded to branded, premiumization, rise of super premium & luxury, and rapid growth in Gen Z focused digital first brands. This is an attractive portfolio comprising of multiple high growth segments in large addressable markets with strong value creation opportunities.
The company said that subsequent to the completion of the proposed demerger, it will raise growth capital within 12 months to infuse strength into its balance sheet, positioning itself well to pursue the large growth opportunity that lies ahead of it.
Kumar Mangalam Birla, chairman, Aditya Birla Group, said, Over the years, our fashion and retail business, has grown from 5 brands in 2 categories, to a dynamic portfolio of more than 20 brands across all lifestyle categories. The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value creation opportunities.
The platform embarks on its next transformational phase of growth, there is scope to re-evaluate capital structures to optimize different parts of the portfolio. The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value.
Ashish Dikshit, MD, Aditya Birla Fashion and Retail, said, Each of these businesses have always been operated autonomously under respective CEOs. He added, Indian fashion and apparel sector is USD 100bn+ sector and is poised for a double-digit long-term growth. The simplified structure positions the businesses well for sustained growth and value creation.
The company reported a consolidated net loss of Rs 107.60 crore in Q3 FY24 as compared with net profit of Rs 11.21 crore posted in Q3 FY23. Revenue from operations grew by 16.1% year on year to Rs 4,166.71 crore during the quarter.
Aditya Birla Fashion and Retail (ABFRL) is engaged in the business of manufacturing and retailing of branded apparels and runs a chain of apparels and accessories retail stores in India. As on 31 December 2023, the company has a network of 4,753 stores across approximately 37,106 multi-brand outlets with 9,781 point of sales in department stores across India.
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