Aditya Birla Fashion gains 3% after Jefferies says it is a top pick in organised retail sector

Aditya Birla Fashion & Retail shares rallied nearly 3 percent in morning on Monday after global research firm Jefferies says it is a top pick among organised retail sector.

The investment firm has maintained its buy call on the stock with a target price at Rs 234 per share, implying 18 percent potential upside.

It said the demand traction has been strong & is expected to continue. "Management's tone is bullish for both Madura & Pantaloons."

However, Jefferies cut EPS estimates by 6 percent for FY19 to factor in higher depreciation & interest.

Anand Rathi also has a buy rating on the stock, with a revised target price of Rs 239 based on 19x FY21e EV/EBITDA.

With its operations across segments and a wide retail network, it is appropriately placed, to benefit from India’s growing branded apparel industry, the research house said.

The sharp first half of FY19 turnaround (PAT to Rs 48.3 crore versus a Rs 30.3 million net loss a year ago) for ABFRL stemmed from management initiatives across its various divisions.

ABFRL brings together Madura Fashion and Pantaloons Retail. It is the custodian of several icons, including the top fashion brands of India - Louis Philippe, Van Heusen, Allen Solly, Peter England and other high end brands. India's largest big box fashion retailer, Pantaloons is one of the fastest growing lifestyle apparel retail destinations in India.

On the strong profit growth, Anand Rathi raised EBITDA margin estimate by 1 percent to 8.30 percent FY20E.

The company’s revenue grew 8.7 percent YoY, to Rs 1,910 crore in Q2FY19, in line with estimate. Segment-wise, Pantaloons' revenue growth was around 11 percent & Madura Lifestyle brands around 6 percent.

At 09:47 hrs Aditya Birla Fashion & Retail was quoting at Rs 202.30, up Rs 3.20, or 1.61 percent.

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