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Institutional Equities

Aditya Birla Fashion & Retail 12 January 2022

Steering the ethnic wear portfolio in the right direction

COMPANY UPDATE Aditya Birla Fashion & Retail (ABFRL) has bolstered its presence in the ethnic wear
Sector: Retail Rating: BUY space with the launch of Tasva and Marigold Lane, which provides better visibility on
its ethnic wear revenue target of Rs 20bn by FY26 (Rs 680mn in FY21). We expect
CMP: Rs 301 Target Price: Rs 360
Sabyasachi, Tasva and Marigold Lane to dominate its ethnic wear revenues, followed
Stock Info by niche brands like Shantanu & Nikhil (S&N) and Jaypore. The ramp-up in new
Sensex/Nifty 61,150/ 18,212 businesses and healthy growth in core businesses (Lifestyle and Pantaloons) should
Bloomberg ABFRL IN propel revenue growth. However, factoring in the effect of COVID-19 in 4QFY22 and
Equity shares (mn) 774.0 tweaking sales per sqft and margins for FY23E, we cut our FY22E/FY23E
52-wk High/Low Rs 310/ 149 revenue/EBITDA by 4%/10% and 3%/3%, respectively, and introduce FY24E. We
Face value Rs 10 maintain our BUY rating on the stock with a revised SoTP-based target price of Rs 360
M-Cap Rs 282bn/USD 3.8bn (Rs 300 earlier; implying 56x FY24E PER) based on 15x FY24E EV/EBITDA for Lifestyle
3-m Avg volume USD 16.3mn brands, 10x for Pantaloons, 4x EV/sales for ethnic wear and 3.5x for other businesses.
Tasva – affordable premium menswear brand to compete with Manyavar: The launch
Financial Snapshot (Rs mn) of Tasva, in partnership with designer Tarun Tahiliani (TT), marks ABFRL’s entry into the
Y/E Mar FY22E FY23E FY24E affordable premium men’s ethnic and celebration wear market. Tasva is the first launch
Sales 82,489 113,398 141,975 post ABFRL’s acquisition of a 33.5% stake in TT’s couture business in Feb’21. ABFRL owns
PAT -1,483 2,455 6,031
an 80% stake in the partnership, while TT owns a 20%. We expect Tasva to compete with
EPS (Rs) (1.6) 2.6 6.4
PE (x) (189.0) 115.0 46.8
Manyavar - products are priced at a ~15-20% premium to Manyavar. The product range
EV/EBITDA (x) 25.0 16.7 12.7 includes sherwanis, bandhgalas, kurtas & bundis and accessories like mojaris & broaches.
P/BV (x) 11.0 10.1 8.3 Customers can purchase products on www.tasva.com and at stores in Bengaluru and
EV/Sales 3.5 2.5 2.0 Thane; 5 more stores will be opened in Delhi, Bengaluru, Hyderabad and Indore. We
RoE (%) (5.7) 9.2 19.5 expect ABFRL to open ~200 stores over the next 3-4 years, mainly through a franchisee-
RoCE (%) 2.7 10.7 16.5 led model, to gain share in the largely unbranded (~65-70%) industry.
NWC (days) 12.2 21.8 31.2
Net gearing (x) 0.3 0.2 0.1 Marigold Lane – to capture the affordable premium women ethnic wear market: ABFRL
has also launched Marigold Lane, an affordable modern women’s ethnic wear brand. The
Shareholding Pattern (%) merchandise range includes kurtis, tops, tunics, pants & palazzos and is sold through
Sep 21 Jun 21 Mar 21 shop-in-shops (SIS) in ~350 Pantaloons stores, exclusive brand outlets (EBOs) and online
Promoter 56.1 56.1 56.1 platform www.pantaloons.com. Marigold Lane will be competing with brands like W,
–Pledged - - - Biba, Soch, Fabindia & Libas. We expect ABFRL to open ~100 EBOs in 2-3 years.
FII 13.8 14.2 14.2
Long-term prospects of the ethnic wear market remain undeterred: India’s ethnic wear
DII 17.8 17.7 17.7
Others 12.3 12.0 12.0
market was valued at ~USD 24bn (~30-35% is branded) in FY20 and accounted for ~32%
of the overall retail apparel market; it is estimated to grow at a CAGR of ~14% to reach
Stock Performance (1-year) ~USD 32bn (~45-50% branded) by FY25. While a large portion of the ethnic wear market
remains unbranded, the branded segment is growing faster due to a better merchandise
340
300
mix, standardized pricing, brand strength, expansion of players beyond tier-2 cities and a
260 superior customer experience. The large wedding market and festivals throughout the
220 year remain the fundamental drivers of India’s organized ethnic wear market. There is a
180 huge potential for this market to grow and ABFRL is well-poised to capture this growth.
140
100 Maintain BUY with a revised TP of Rs 360: We remain sanguine about ABFRL’s growth
Jul-21
Jan-21

Mar-21
Feb-21

Apr-21

Aug-21

Sep-21

Nov-21

Jan-22
Dec-21
May-21

Jun-21

Oct-21

outlook given a strong recovery in core businesses, aggressive product portfolio

expansion, network expansion and lower net debt. We expect the company to fund
ABFRL SENSEX
additional investments in ethnic wear through cash flows from its core businesses. We
maintain our BUY rating on the stock with a revised SoTP-based target price of Rs 360.
Ashutosh Joytiraditya
Recurrent COVID-19 waves remain a risk to our call.
ashutoshj@systematixgroup.in
+91 22 6704 8068

Premal Kamdar
premalkamdar@systematixgroup.in
+91 22 6704 8090

Investors are advised to refer disclosures made at the end of the research report.

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12 January 2022 Aditya Birla Fashion & Retail
An overview of the Indian ethnic wear market
India’s ethnic wear market was valued at ~USD 24bn (~30-35% is branded) in FY20
and accounted for ~32% of the overall retail apparel market; it is estimated to grow
at a CAGR of ~14% to reach ~USD 32bn (~45-50% branded) by FY25. Women’s ethnic
wear (includes lehengas, kurtis, sarees and salwar kameez) is the largest segment
(~81%) due to the need for daily-wear & office-wear as well as weddings &
celebration wear. Men’s ethnic wear (sherwanis, kurta jacket sets, kurta pajama,
Indo-western apparel) is the second-largest category (~10%) and is dominated by
weddings and celebration wear (~80% of men’s ethnic wear sales). Kids ethnic wear
accounts for the remaining ~9% of the market. The large wedding market and
festivals throughout the year remain the fundamental drivers of India’s organized
ethnic wear market.
Exhibit 1: Branded apparel to form ~50% of the ethnic wear market Exhibit 2: Category-wise split of ethnic wear market

~USD 17bn ~USD 24bn ~USD 32bn

100%
90%
80%
50-55%
70% 65-70%
60% 81% CAGR ~19% 43% Indian wedding and
CAGR ~14%
50% celebration wear
40% Casual ethnic wear
30% 57%
45-50%
20% 30-35%
10% 19%
0%
FY15 FY20E FY25P
Branded Unbranded

Source: CRISIL Research, Systematix Institutional Research Source: CRISIL Research, Systematix Institutional Research

A significant portion of the ethnic wear market remains unbranded. The branded
segment accounts for ~30-35% of the overall ethnic wear retail market. However,
growth in the branded segment is outpacing the unbranded segment due to a better
merchandise mix, standardized pricing, brand strength, expansion of players beyond
tier-2 cities and superior customer experience.
Exhibit 3: Weddings and celebration wear split Exhibit 4: Branded share to reach 32% by FY25

CAGR ~9.5% CAGR ~17%

~USD 10bn ~USD 14bn ~USD 18bn
100%
~USD 10bn ~USD 14bn ~USD 14bn ~USD 8bn ~USD 12bn ~USD 18bn
100% 90%
90% 13% 15% 15% 18% 15% 15% 80%
80% 70%
70% 60% 80-85% 68-72%
60% 90%
50% CAGR ~29% CAGR ~20%
50% 73% 72% 72% 70% 73% 72%
40% 40%
30% 30%
20% 20%
10% 14% 13% 13% 12% 13% 10% 15-20% 28-32%
11% 10%
0% 0%
FY15 FY19 FY20 FY21E FY22P FY25P FY15 FY20E FY25P
Men's wear Women's wear Kid's wear Branded Unbranded

Source: CRISIL Research, Systematix Institutional Research Source: CRISIL Research, Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 5: Men’s weddings and celebration wear split Exhibit 6: Women’s weddings and celebration wear split

~USD 1.3bn ~USD 1.8bn ~USD 2.4bn ~USD 7.3bn ~USD 9.8bn ~USD 13.3bn
100% 100%
90% 90%
80% 80%
70% 50-55% 70%
60% CAGR ~27% 75-80% CAGR ~22% 60% CAGR ~32% 80-85% CAGR ~20% 70-73%
90% 94%
50% 50%
40% 40%
30% 30%
20% 40-45% 20%
10% 20-25% 10% 15-20% 27-30%
10% 6%
0% 0%
FY15 FY20E FY25P FY15 FY20E FY25P
Branded Unbranded Branded Unbranded

Source: CRISIL Research, Systematix Institutional Research Source: CRISIL Research, Systematix Institutional Research

Exhibit 7: Sales channel mix in the ethnic wear industry

Branded players choose sales 5%

channels based on brand positioning,
sales strategy, capital availability and
business model. Players in the mass to
mid segment typically use sales
40% EBO
channels like LFS and MBO. In
contrast, those targeting the mid to MBO
premium segment (Manyavar) focus 40%
LFS
on EBOs to sell apparel and offer
consumers a premium experience. e-commerce
EBO is the best strategy for branded
players to establish a strong brand
presence and customer connection.

15%
Source: Vedant Fashion prospectus, Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail
Weddings are the key drivers of weddings/celebration wear sales
India has a large youth population with ~34% in the 20-39 age demographic. Further,
the 15-19 age demographic (~10% of the population) will move to the 20-24 age
demographic in the next five years, joining the marriage-appropriate demographic.
This indicates a higher marriage-appropriate population in the 20-39 age
demographic. Hence, the demand for weddings and celebration wear is expected to
remain robust over the next decade. Rising income levels are leading to higher
discretionary spending on weddings and festivals. There is also an increasing trend of
guests shopping exclusively for weddings. The growing trend of wearing suitable
attire for festive events is aiding demand for weddings and celebration wear.
Corporate offices also encourage employees to dress up in Indian attire during
festivals, which acts as a growth driver for the segment.
Exhibit 8: Growth drivers for the Indian ethnic wear market

Increasing trend of
Higher discretionary
ethnic-wear during
spends
festivals

~10mn wedding per Shift towrads ready-

year to-wear ethnic-wear

Drivers of
Increased ethnic- Addition of new
penetration of
branded apparel in wear categories (Indo-
market in western)
tier - 2,3 markets
India

Source: Systematix Institutional Research

Brands follow the latest trends and utilize data analytics to identify specific customer
needs. Consumers are shifting to ready-to-wear from tailored apparel, given the
flexibility of trials. Indo-western wear has emerged as another growth driver for the
industry. This category appeals to youth due to styling and differentiating features.
Lastly, the penetration of branded players in tier-2,3 markets is increasing the market
size and visibility. We remain confident of the growth prospects of the ethnic wear
industry, given strong demand drivers and increasing acceptance of weddings and
celebration wear.
Note: “Weddings and celebration wear” is defined as apparel that is worn on special
occasions like weddings; close-knit family functions such as pujas, housewarming,
etc.; traditional festivals such as Diwali, Eid, Holi, and Rakshabandhan; and other
events such as Independence Day, Republic Day, etc.

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 9: Main festivals in India
Festivals No. of days Month Quarter
Lohri 2 January Q4
Makar Sankranti 2 January Q4
Pongal 1 January Q4
Republic Day 1 January Q4
Vasant Panchami 1 February Q4
Maha Shivratri 2 February Q4
Holi 2 March Q1
Mahavir Jayanti 1 April Q1
Rama Navami 1 April Q1
Easter 1 April Q1
Gudi Padwa 1 April Q1
Akshay Trititya 1 April-May Q1
Eid-al-Fitr 2-3 April-May Q1
Eid-al-Adha 3 July-August Q2
Independence Day 1 August Q2
Janmastami 1 August Q2
Pateti / Parsi New Year 1 August Q2
Onam 1 August Q2
Raksha Bandhan 1 August-September Q2
Ganesh Chaturthi 10-11 August-September Q2
Navaratri 9 October-November Q3
Durga Puja 5-6 October-November Q3
Dussehra 1 October-November Q3
Eid-Milad-un-Nabi 2 October-November Q3
Diwali 4-5 October-November Q3
Christmas 1 December Q3
Source: Vedant Fashion prospectus, Systematix Institutional Research

Exhibit 10: Leading players in the ethnic wear market

Source: Vedant Fashions prospectus, Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail
ABFRL – to become a formidable player in ethnic wear through strategic initiatives
Historically, ABFRL has played the ethnic wear market through Pantaloons,
leveraging the value-retail format’s range of private labels. However, through four
acquisitions in the recent past (Jaypore, Shantanu & Nikhil, Sabyasachi and Tarun
Tahiliani), it has revamped its portfolio to target the Premium, Bridge-to-Luxury and
Luxury segments. It recently launched two brands, Tasva and Marigold Lane to
bolster its ethnic wear portfolio. Tasva is in partnership with Tarun Tahiliani, where
ABFRL has an 80% stake, while TT has a 20%. The product range includes sherwanis,
bandhgalas, kurtas & bundis and accessories like mojaris & broaches. We expect
Tasva to compete with Manyavar - products are priced at a ~15-20% premium to
Manyavar. Products can be purchased on www.tasva.com and at stores in Bengaluru
and Thane; 5 more stores will be opened in Delhi, Bengaluru, Hyderabad and Indore.
We expect ABFRL to open ~200 stores over 3-4 years, mainly through the franchisee-
led model, to gain share in the largely unbranded (~65-70%) industry.
Exhibit 11: Acquisitions to strengthen the ethnic wear portfolio
Acquisitions Segment Date of acquisition Stake purchased (%) Consideration (Rs mn) Revenue (Rs mn) PBT (Rs mn)
Jaypore Premium Jul'19 100% 1,100 432 (145)
S&N Luxury Jul'19 51% 600 218 (44)
Sabyasachi Luxury Jan'21 51% 3,980 2,740 NA
Tarun Tahiliani Luxury Feb'21 33.5% 670 670 NA
Source: Company, Systematix Institutional Research; *Revenue and PBT is for FY20

Exhibit 12: Rationale for building the ethnic wear portfolio

Source: Company, Systematix Institutional Research

In addition to Tasva, ABFRL has launched the affordable modern women’s ethnic
wear brand Marigold Lane. The merchandise range includes kurtis, tops, tunics,
pants & palazzos and is sold through shop-in-shops (SIS) in ~350 Pantaloons stores,
exclusive brand outlets (EBOs) and online platform www.pantaloons.com. Marigold
Lane will compete with brands like W, Biba, Soch, Fabindia & Libas. We expect ABFRL
to open ~100 EBOs in 2-3 years. The addition of these brands offers better visibility
on ABFRL’s ethnic wear revenue target of Rs 20bn by FY26 (Rs 680mn in FY21).

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 13: Tasva store in Thane

Source: Company, Systematix Institutional Research

Exhibit 14: Price comparison across SKUs (Rs)

Items Tasva Manyavar
Min Max Min Max
Single kurta 1,599 3,999 999 5,999
Kurta set 3,499 15,999 1,499 7,999
Kurta bundi set 4,999 19,999 4,999 14,999
Bandhgalas 9,999 29,999 9,999 11,999
Sherwani 14,999 74,999 11,999 39,999
Source: Tasva and Manyavar websites, Systematix Institutional Research

Exhibit 15: Price comparison across SKUs (Rs)

Items Marigold Lane W Soch Biba
Min Max Min Max Min Max Min Max
Single kurta 1,499 3,999 699 5,999 798 3,998 999 4,995
Kurta sets 1,999 6,999 1,999 19,999 1,998 9,998 1,999 14,950
Pants & Palazzos 1,299 1,999 799 2,799 1,398 1,498 699 3,599
Source: Company websites, Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 16: Marigold Lane has subpar product placement in stores; sarees have better visibility

Source: Systematix Institutional Research

Corporate partnerships with luxury fashion labels to develop the ethnic wear market
The ethnic wear industry witnessed a string of corporate mergers and acquisitions led by
ABFRL and Reliance. Recently, Reliance Brands entered a JV with Anamika Khanna for
owning and developing the designer’s ready-to-wear ‘AK-OK’ brand. In Oct’21, Reliance
Retail acquired a majority stake in fashion designer Ritu Kumar’s Ritika Pvt. Ltd. Reliance
Brands also has equity investments in couture brands of Manish Malhotra and
Raghavendra Rathore. The collaboration of top retail companies with legacy brands
comes when the fashion industry dynamics are changing due to the emergence of social
media and e-commerce. Young consumers in large and small cities have become
aspirational and look for new brands and designs. Additionally, COVID-19 has shrunk the
demand for fashion apparel, prompting couture brands to seek the support of large
corporates.
Retail conglomerates like ABFRL and Reliance needed collaboration as their product
portfolio is highly skewed towards western wear. Partnerships with legacy brands
provide an already established name & recognition and a ready-made talent pool. Large
corporates were also losing a large share of the wedding spending wallet. For
couture/legacy fashion brands aimed at the affluent, the partnerships will lead to a broad
set of shoppers with accessible price points, strong distribution and wider collections.
We believe that such partnerships/JVs are a win-win for retail conglomerates and legacy
fashion brands and help develop India’s ethnic wear market.

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 17: Financial metrics across players Exhibit 18: RoCE profile across players
(Rs mn) 50%
14,000 50% 41%
40%
12,000 40% 32%
10,000 29%
30% 30%
8,000 21%
20%
6,000 20%
10% 12%
4,000 7%
10%
2,000 0%
0 -10% 0%
Nalli

BIBA

Neeru
Manyavar

TCNS

SOCH

Jahanpanah
-10% -5%

Nalli

Neeru
Jahanpanah
Manyavar

TCNS

BIBA

SOCH
Revenue EBITDA margin (RHS) Net profit margin (RHS)

Source: Vedant Fashion prospectus, Systematix Institutional Research Source: Vedant Fashion prospectus, Systematix Institutional Research

Exhibit 19: No. of EBOs for key players in the ethnic wear market Exhibit 20: ABFRL’s ethnic wear revenues to grow at a 51% CAGR
(Rs mn)
600
530 12,000 0.1% 10%
-4.0%
500 -7.0% 0%
10,000
381 -10%
400
8,000
-28.9% -20%
300
6,000 -30%
200 -40%
124 4,000
-57.4% -50%
100 55
29 21 18 2,000
-60%
0 450 680 4,400 7,100 10,000
0 -70%
Swayamvar
Nalli

Neeru
Soch
Manyavar

TCNS
BIBA

FY20 FY21 FY22E FY23E FY24E

Revenue EBITDA margin (RHS)

Source: Vedant Fashion prospectus, Systematix Institutional Research Source: Company, Systematix Institutional Research

ABFRL’s ethnic wear business is expected to grow at a CAGR of 51% during FY22-24E
ABFRL has established its presence across the consumption chain through partnerships
and acquisitions. It has 1) a value play through Pantaloons’ private labels, 2) a premium
play through its own new brands, 3) an affordable luxury play through the brand
extension of designers and (4) a luxury play through inorganic acquisitions and
partnerships. We expect ethnic wear growth to be propelled by strategic acquisitions,
latest and aspirational designs, brand extensions, accelerated retail expansion and brand
launches. This will help the company reach its long-term revenue target of Rs 20bn by
FY26. We expect Sabyasachi, Tasva and Marigold Lane to dominate the company’s ethnic
wear revenues, followed by niche brands like Shantanu & Nikhil (S&N) and Jaypore. We
build in a sales CAGR of 51% during FY22-24E. Since most brands will be in an investment
phase (supported by cash-flows of core businesses), we don’t expect a positive EBITDA till
FY24 in this segment.
Exhibit 21: Key changes in estimates
New estimates Old estimates Variance
(Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E
Revenue 82,489 1,13,398 85,662 1,17,061 -4% -3%
EBITDA 11,537 17,266 12,882 17,721 -10% -3%
Source: Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail
Exhibit 22: The stock is trading at 17.9x one-yr forward EV/EBITDA Exhibit 23: Valuation Summary
(x) EBITDA/ Per
Valuation Multiple
Segment (Rs bn) Sales Value share
Metric (x)
52 (FY24E) (Rs)
42 Lifestyle Brands 14 EV/EBITDA 15 206 220
32 Pantaloons 8 EV/EBITDA 10 83 89
22 Ethnic wear (Sales) 10 EV/Sales 4 39 42
12
Innerwear/Others (Sales) 12 EV/Sales 3.5 43 46
2
Target EV of company 372 396
-8
Net debt 34 36
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21

Jan-22
Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Target equity value 338 360

1-Year Fwd EV/EBITDA 5-Year average Current market price (Rs) 301

+1 STDEV -1 STDEV Potential upside (%) 20%

Source: Bloomberg, Systematix Institutional Research Source: Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail

FINANCIALS
Profit & Loss Statement Balance Sheet
YE: Mar (Rs mn) FY20 FY21 FY22E FY23E FY24E YE: Mar (Rs mn) FY20 FY21 FY22E FY23E FY24E
Net Sales 87,879 52,489 82,489 113,398 141,975 Equity capital 7,740 9,151 9,320 9,380 9,380
Reserves and surplus 3,138 17,612 16,129 18,583 24,614
RM costs/inventories 42,242 25,630 38,381 52,195 65,349 Total Equity 10,878 26,763 25,449 27,963 33,994
Gross Profits 45,637 26,860 44,108 61,203 76,627 Total Debt 23,688 8,184 11,644 11,144 10,644
Employee costs 10,681 8,654 10,300 13,593 16,309 Lease liabilities 25,018 24,634 25,634 28,634 30,834
Total sources 62,480 66,600 69,746 74,761 82,492
Net Block/ ROU asset 28,938 27,537 29,059 29,093 29,187
Other costs 17,968 12,552 20,206 25,581 31,886 Net deferred tax 1,950 3,339 3,339 3,339 3,339
Total Expenses 75,760 46,942 70,952 96,132 119,507 Other assets 4,121 4,843 4,843 4,843 4,843
EBITDA 12,118 5,548 11,537 17,266 22,469 Intangibles 20,938 26,969 26,969 26,969 26,969
Depreciation 8,853 9,628 10,478 10,966 11,506 Investments - - - - -
Other income 653 734 686 960 1,248 Cash 2,669 2,618 3,521 4,478 6,769
EBIT 3,918 (3,346) 1,745 7,259 12,211 Inventories 23,668 18,470 25,555 29,749 30,979
Interest cost 4,250 5,030 3,728 3,978 4,148 Debtors 8,405 7,305 8,542 10,500 11,590
PBT (332) (8,376) (1,983) 3,281 8,063 Other Current assets 6,967 10,634 10,634 10,634 10,634
Taxes 1,321 (2,100) (500) 827 2,032 Current Assets 39,039 36,408 44,731 50,882 53,203
Adj. PAT (1,653) (6,276) (1,483) 2,455 6,031 Creditors 22,899 23,734 31,336 33,464 30,438
Extraordinaries/Deferred tax - 1,080 - - - Other Current Liabilities 12,277 11,380 11,380 11,380 11,380
Reported PAT (1,653) (7,356) (1,483) 2,455 6,031 Current Liabilities 35,176 35,115 42,716 44,844 41,818
No. of shares (mn) 774 915 932 938 938 Net Working Capital 3,863 1,294 2,015 6,039 11,385
Adj. EPS (2.1) (6.9) (1.6) 2.6 6.4 Total Uses 62,480 66,600 69,746 74,761 82,492
Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

Cash Flow Ratios

YE: Mar (Rs mn) FY20 FY21 FY22E FY23E FY24E YE: Mar FY20 FY21 FY22E FY23E FY24E
PBT (332) (8,376) (1,983) 3,281 8,063 Yoy growth in Revenue 8.3 (40.3) 57 37 25
Add: Depreciation 8,853 9,628 10,478 10,966 11,506 Yoy growth in EBITDA 118.7 (54.2) 108.0 49.7 30.1
Add: Interest 4,250 5,030 3,728 3,978 4,148 Yoy growth in Net income (229.9) 279.6 (76.4) (265.5) 145.7
Less: taxes paid 65 28 500 (827) (2,032)
Add: other adjustments (140) (3,743) - - - Effective tax rate - - 25.2 25.2 25.2
Less: WC changes 6,126 (8,528) 721 4,024 5,346 EBITDA margin 13.8 10.6 14.0 15.2 15.8
Total OCF 6,440 11,038 12,002 13,375 16,339 PAT margin (1.9) (12.0) (1.8) 2.2 4.2
Operating CF w/o WC changes 12,567 2,510 12,722 17,399 21,685 ROACE 8.2 (5.4) 2.7 10.7 16.5
Capital expenditure (3,184) (1,613) (4,000) (4,000) (4,400) ROAE (13.1) (33.3) (5.7) 9.2 19.5
Leased asset - - - - -
Change in investments (2,328) (6,964) - - - Net debt to equity (x) 1.9 0.2 0.3 0.2 0.1
Interest/Dividend received 3 24 - - - Inventory days 205 263 243 208 173
Total ICF (5,509) (8,552) (4,000) (4,000) (4,400) Debtor days 35 51 38 34 30
Free Cash Flows 1,894 9,581 8,002 9,375 11,939 Payable days 198 338 298 234 170
Share issuances 72 22,388 170 60 - NWC days 38 14 12 22 31
Payment of lease liability (5,886) (4,061) (7,000) (4,000) (5,000) Per share numbers (Rs)
Change in borrowings 10,742 (11,502) 3,460 (500) (500) Reported earnings (2.1) (6.9) (1.6) 2.6 6.4
Dividends - - - - - Dividend - - - - -
Interest payment (4,243) (4,759) (3,728) (3,978) (4,148) Free cash (5.2) 6.0 1.1 5.7 7.4
Others 479 (4,759) - - - Book Value 14.1 29.2 27.3 29.8 36.2
Total FCF 1,165 (2,693) (7,098) (8,418) (9,648) Valuations (x)
Net change in cash 2,096 (207) 903 957 2,291 Price to diluted earnings (140.9) (37.4) (189.0) 115.0 46.8
Opening cash & CE 572 2,668 2,461 3,365 4,322 EV / EBITDA 21.0 50.6 25.0 16.7 12.7
Closing cash & CE 2,668 2,461 3,365 4,322 6,613 Price to sales 2.7 5.2 3.4 2.5 2.0
Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

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12 January 2022 Aditya Birla Fashion & Retail

Institutional Equities Team

Nikhil Khandelwal Managing Director +91-22-6704 8001 nikhil@systematixgroup.in
Navin Roy Vallabhaneni President & Head – IE +91-22-6704 8065 navin@systematixgroup.in
Equity Research
Analysts Industry Sectors Desk-Phone E-mail
Amar Kedia Infra, Cap Goods, Logistics, Real Estate +91-22-6704 8084 amarkedia@systematixgroup.in
Ashish Poddar Consumer Durables, Building Materials, Small & Midcaps +91-22-6704 8039 ashishpoddar@systematixgroup.in
Ashutosh Joytiraditya Consumer, Retail +91-22-6704 8068 ashutoshj@systematixgroup.in
Praful Bohra Pharmaceuticals and Healthcare +91-22-6704 8064 prafulbohra@systematixgroup.in
Pratik Tholiya Speciality Chem, Agrichem, Sugar and Fertilizer, Textiles and Packaging +91-22-6704 8028 pratiktholiya@systematixgroup.in
Premal Kamdar Consumer Staples +91-22-6704 8090 premalkamdar@systematixgroup.in
Rahul Jain Metals & Mining, Cement +91-22-6704 8066 rahuljain@systematixgroup.in
Rakesh Kumar Banking, Insurance +91-22-6704 8041 rakeshkumar@systematixgroup.in
Ronak Sarda Auto, Auto Ancillaries +91-22-6704 8059 ronaksarda@systematixgroup.in
Shubhranshu Mishra NBFCs & Diversified Financials +91-22-6704 8024 shubhranshumishra@systematixgroup.in
Harsh Mittal Cement, Building Materials, Paints +91-22-6704 8098 harshmittal@systematixgroup.in
Hena Vora NBFCs & Diversified Financials +91-22-6704 8045 henavora@systematixgroup.in
Nikhil Shah Banking, Insurance +91-22-6704 8091 nikhilshah@systematixgroup.in
Poorvi Banka Auto, Auto Ancillaries +91-22-6704 8063 poorvibanka@systematixgroup.in
Pranay Shah Consumer Durables, Building Materials, Small & Midcaps +91-22-6704 8017 pranayshah@systematixgroup.in
Shweta Dikshit Metals & Mining +91-22-6704 8042 shwetadikshit@systematixgroup.in
Shilpashree Venkatesh Macro-Strategy +91-22-6704 8078 shilpav@systematixgroup.in
Tausif Shaikh Pharmaceuticals and Healthcare +91-22-6704 8046 tausifshaikh@systematixgroup.in
Varun Gajaria Midcaps +91-22-6704 8081 varungajaria@systematixgroup.in
Equity Sales & Trading
Name Desk-Phone E-mail
Vipul Sanghvi Director and Head - Sales +91-22-6704 8062 vipulsanghvi@systematixgroup.in
Ashok Kumar Agarwal Sales +91-22-6704 8058 ashokagarwal@systematixgroup.in
Jigar Kamdar Sales +91-22-6704 8060 jigarkamdar@systematixgroup.in
Nirbhay Kumar Singh Sales +91-22-6704 8061 nirbhaysingh@systematixgroup.in
Rahul Khandelwal Sales +91-22-6704 8033 rahul@systematixgroup.in
Pawan Sharma Director and Head - Sales Trading +91-22-6704 8067 pawansharma@systematixgroup.in
Mukesh Chaturvedi Vice President and Co Head - Sales Trading +91-22-6704 8074 mukeshchaturvedi@systematixgroup.in
Vinod Bhuwad Sales Trading +91-22-6704 8051 vinodbhuwad@systematixgroup.in
Rashmi Solanki Sales Trading +91-22-6704 8097 rashmisolanki@systematixgroup.in
Karan Damani Sales Trading +91-22-6704 8053 karandamani@systematixgroup.in
Vipul Chheda Dealer +91-22-6704 8050 vipulchheda@systematixgroup.in
Amit Sawant Dealer +91-22-6704 8054 amitsawant@systematixgroup.in
Paras Shah Dealer +91-22-6704 8047 parasshah@systematixgroup.in
Suketu Vyas Dealer +91-22-6704 8050 suketuvyas@systematixgroup.in
Corporate Access
Audrey Leolyn Mendonca Assistant Vice President +91-22-6704 8088 audreymendonca@systematixgroup.in
Production
Yukti Vidyarthi Editor +91-22-6704 8071 yukti@systematixgroup.in
Mrunali Pagdhare Production +91-22-6704 8057 mrunalip@systematixgroup.in
Vijayendra Achrekar Production +91-22-6704 8089 vijayendraachrekar@systematixgroup.in
Operations
Sachin Malusare Vice President +91-22-6704 8055 sachinmalusare@systematixgroup.in
Sugandha Rane Assistant Vice President +91-22-6704 8056 sugandha@systematixgroup.in
Jignesh Mistry Manager +91-22-6704 8049 jigneshmistry@systematixgroup.in
Ravikiran Dasaka Manager +91-22-6704 8019 ravikiran@systematixgroup.in
Ravi Agarwal Assistant Manager +91-22-6704 8016 raviagarwal@systematixgroup.in

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12 January 2022 Aditya Birla Fashion & Retail

DISCLOSURES/APPENDIX

I. ANALYST CERTIFICATION
I, Ashutosh Joytiraditya, Premal Kamdar; hereby certify that (1) views expressed in this research report accurately reflect my/our personal views about any or all of the subject securities
or issuers referred to in this research report, (2) no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in
this research report by Systematix Shares and Stocks (India) Limited (SSSIL) or its group/associate companies, (3) reasonable care is taken to achieve and maintain independence and
objectivity in making any recommendations.

Disclosure of Interest Statement Update

Analyst holding in the stock No
Served as an officer, director or employee No

II. ISSUER SPECIFIC REGULATORY DISCLOSURES, unless specifically mentioned in point no. 9 below:

1. The research analyst(s), SSSIL, associates or relatives do not have any financial interest in the company(ies) covered in this report.

2. The research analyst(s), SSSIL, associates or relatives collectively do not hold more than 1% of the securities of the company(ies) covered in this report as of the end of the
month immediately preceding the distribution of the research report.

3. The research analyst(s), SSSIL, associates or relatives did not have any other material conflict of interest at the time of publication of this research report.
4. The research analyst, SSSIL and its associates have not received compensation for investment banking or merchant banking or brokerage services or any other products or
services from the company(ies) covered in this report in the past twelve months.
5. The research analyst, SSSIL or its associates have not managed or co-managed a private or public offering of securities for the company(ies) covered in this report in the previous
twelve months.
6. SSSIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party in connection with this research
report.

7. The research analyst has not served as an officer, director or employee of the company(ies) covered in this research report.

8. The research analyst and SSSIL have not been engaged in market making activity for the company(ies) covered in this research report.

9. Details of SSSIL, research analyst and its associates pertaining to the companies covered in this research report:

Sr. Yes /
Particulars
No. No.
1 Whether compensation was received from the company(ies) covered in the research report in the past 12 months for investment banking transaction by SSSIL. No
2 Whether research analyst, SSSIL or its associates and relatives collectively hold more than 1% of the company(ies) covered in the research report. No
3 Whether compensation has been received by SSSIL or its associates from the company(ies) covered in the research report. No
Whether SSSIL or its affiliates have managed or co-managed a private or public offering of securities for the company(ies) covered in the research report in the
4 No
previous twelve months.
Whether research analyst, SSSIL or associates have received compensation for investment banking or merchant banking or brokerage services or any other
5 No
products or services from the company(ies) covered in the research report in the last twelve months.

10. There is no material disciplinary action taken by any regulatory authority that impacts the equity research analysis activities.

STOCK RATINGS
BUY (B): The stock's total return is expected to exceed 15% over the next 12 months.
HOLD (H): The stock's total return is expected to be within -15% to +15% over the next 12 months.
SELL (S): The stock's total return is expected to give negative returns of more than 15% over the next 12 months.
NOT RATED (NR): The analyst has no recommendation on the stock under review.

INDUSTRY VIEWS
ATTRACTIVE (AT): Fundamentals/valuations of the sector are expected to be attractive over the next 12-18 months.
NEUTRAL (NL): Fundamentals/valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months.
CAUTIOUS (CS): Fundamentals/valuations of the sector are expected to deteriorate over the next 12-18 months.

III. DISCLAIMER
The information and opinions contained herein have been compiled or arrived at based on the information obtained in good faith from sources believed to be reliable. Such information
has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy completeness or correctness.

This document is for information purposes only. This report is based on information that we consider reliable; we do not represent that it is accurate or complete and one should exercise
due caution while acting on it. Description of any company(ies) or its/their securities mentioned herein are not complete and this document is not and should not be construed as an
offer or solicitation of an offer to buy or sell any securities or other financial instruments. Past performance is not a guide for future performance, future returns are not guaranteed and
a loss of original capital may occur. All opinions, projections and estimates constitute the judgment of the author as on the date of the report and these, plus any other information
contained in the report, are subject to change without notice. Prices and availability of financial instruments are also subject to change without notice. This report is intended for
distribution to institutional investors.
This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity that is a citizen or resident or located in any
locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject to SSSIL or
its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently sent or has reached any individual in such country, especially USA, the same
may be ignored and brought to the attention of the sender. Neither this document nor any copy of it may be taken or transmitted into the United States (to U.S. persons), Canada, or
Japan or distributed, directly or indirectly, in the United States or Canada or distributed or redistributed in Japan or to any resident thereof. Any unauthorized use, duplication,

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12 January 2022 Aditya Birla Fashion & Retail
redistribution or disclosure of this report including, but not limited to, redistribution by electronic mail, posting of the report on a website or page, and/or providing to a third party a link,
is prohibited by law and will result in prosecution. The information contained in the report is intended solely for the recipient and may not be further distributed by the recipient to any
third party.
SSSIL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any
companies that the analysts cover. Additionally, SSSIL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of
any companies that they cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that
reflect opinions that are contrary to the opinions expressed herein. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the
recommendations expressed herein. The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The
compensation of the analyst who prepared this document is determined exclusively by SSSIL; however, compensation may relate to the revenues of the Systematix Group as a whole, of
which investment banking, sales and trading are a part. Research analysts and sales persons of SSSIL may provide important inputs to its affiliated company(ies).
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations which could have an adverse effect on their value or price or the income
derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. SSSIL, its directors, analysts
or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on the basis of this report
including but not restricted to fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.

SSSIL and its affiliates, officers, directors, and employees subject to the information given in the disclosures may: (a) from time to time, have long or short positions in, and buy or sell, the
securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation (financial interest)
or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential material
conflict of interest with respect to any recommendation and related information and opinions. The views expressed are those of the analyst and the company may or may not subscribe
to the views expressed therein.
SSSIL, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall SSSIL, any of its affiliates or any third
party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. The company accepts no liability whatsoever for the actions of
third parties. The report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of the company, the
company has not reviewed the linked site. Accessing such website or following such link through the report or the website of the company shall be at your own risk and the company
shall have no liability arising out of, or in connection with, any such referenced website.
SSSIL will not be liable for any delay or any other interruption which may occur in presenting the data due to any technical glitch to present the data. In no event shall SSSIL be liable for
any damages, including without limitation, direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by SSSIL
through this presentation.

SSSIL or any of its other group companies or associates will not be responsible for any decisions taken on the basis of this report. Investors are advised to consult their investment
and tax consultants before taking any investment decisions based on this report.

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