Emkay Global Financial Services revised its target price for Aditya Birla Fashion and Retail from Rs 70 to Rs 75, while maintaining its ‘Add’ rating. The new price target implies an upward trend of 7.1% from the current market price. The strong numbers in Q4, robust segment growth, margin expansion, and many other factors led the brokerage house to raise the price target.
Let’s take a look at the key reasons why the brokerage house is bullish on the stock –
Significant earnings beat
As per Emkay’s report, ABFRL delivered a substantial all-around performance in Q4, with EBITDA exceeding Emkay’s estimates by 19% and street estimates by 12%. This was driven by revenue growth that was nearly 200 basis points better than projected.
Strong segment growth
The company’s revenue momentum was spearheaded by robust performance in major segments, specifically 45% growth in the TMRW portfolio and 19% growth in the core Pantaloons segment. Premium ethnic brands also showed strength, with Tasva and Jaypore growing at 33% and 26%, respectively.
Reduced losses in new portfolios
Operational efficiency improved significantly in newer businesses. Also, the company’s cash losses more than halved compared to FY25 for both the TCNS and TMRW segments. This improvement was attributed to disciplined cost management and better store throughputs.
Margin expansion
The consolidated margins were 140 bps higher than estimated in Q4. This margin improvement was broad-based, featuring a 40 bps increase in Pantaloons and a notable 390 bps rise in the Ethnic business margins, primarily due to the narrowing losses in TCNS.
Positive cash flow outlook
While cash utilisation was high in FY26, the company expects this to moderate in the coming years. Emkay highlights that the company is on a trajectory to turn Free Cash Flow (FCF) positive by FY29, a sustainability factor that is expected to drive a future re-rating of the stock.
ABFRL’s share price performance
The share price of Aditya Birla Fashion and Retail has fallen 5% in the last five trading sessions. The stock has declined 4% in the past one month and 17% in the last six months. ABFRL’s stock price has erased more than 27% over the previous 12 months.
ABFRL Q4FY26
The company reported a consolidated net loss of Rs 163.81 crore in the fourth quarter of FY26, compared to a net profit of Rs 23.55 crore in the same period last year.
Its revenue from operations during the March quarter rose almost 16% year-over-year to Rs 1,990.13 crore, up from Rs 1,719.48 crore in the corresponding quarter a year ago.
The company said this marked the “highest organic growth in the last 12 quarters for the company.”
Total expenses increased 16% YoY to Rs 2,287.58 crore for the reporting quarter. Total income, including other income, rose 16.43% to Rs 2,113.67 crore.
