Morgan Stanley is upbeat about Aditya Birla group apparel retailers, with an ‘overweight’ rating on Aditya Birla Fashion and Retail Ltd (ABFRL) and Aditya Birla Lifestyle Brands Ltd (ABLBL) each. The foreign brokerage’s targets for the companies — ABLBL was demerged from ABFRL earlier this year — imply potential gains of 22-47 per cent from the current levels.
Morgan Stanley adds ABLBL to coverage universe, Rs 175 target implies 22% upside
Morgan Stanley has initiated coverage on ABLBL with a target price of Rs 175 apiece, citing a good mix of core lifestyle brands and younger brands offering growth potential.
The brokerage expects ABLBL’s revenue to grow at 10 per cent CAGR from FY25 to FY28, with an expected gradual improvement in margins and return profile.
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According to Morgan Stanley, the defensive discretionary player’s stock currently trades at an embedded value-to-EBITDA multiple of 13 times its FY27 estimates, with the opportunity for multiple expansion upon consistent delivery.
Morgan Stanley upgrades ABFRL, Rs 131 target indicates 47% upside
The brokerage has upgraded ABFRL from ‘equal-weight’ with a target price of Rs 131.
The company, according to Morgan Stanley, is on the cusp of improving fundamentals led by improvements in profitability.
The brokerage also sees the opportunity for a valuation rerating for ABFRL.Â
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ABFRL & ABLBL share price news
Aditya Birla Fashion and Retail shares have risen 22 per cent in a month while the Aditya Birla Lifestyle Brands stock has risen 11 per cent, outperforming a gain of 1.1 per cent in the Nifty50 index.
ABFRL completed its demerger to form ABLBL with a record date of May 22.Â
On this day, ABFRL shareholders became eligible to receive ABLBL shares in a 1:1 ratio.
Read more on ABFRL-ABLBL demerger
