All ‘Buys’ But No Gains For This Indian Stock
Aditya Birla Fashion & Retail Ltd. has remained analysts’ most favourite bet for more than a year. Yet, it’s still to return gains.
The apparel maker and retailer is the only stock with 100 percent ‘Buy’ ratings among Indian companies tracked by 10 or more analysts, according to Bloomberg.
Share price of the company, which sells brands like Van Heusen and Pantaloons, fell by 5 percent in the last one year. The consensus 12-month target of analysts tracked by Bloomberg increased by 8 percent during the period.
The fashion retailer turned profitable in the three months ended December after four quarters, having recovered from the disruption triggered by the Goods and Services Tax. The turnaround will continue on the back prudent store additions and cost cuts, said Edelweiss and ICICI Direct.
Edelweiss Investment Research, with the most bullish target price of Rs 256, said the worst is over for the company as it has laid the foundation for a strong profitable growth. “ABFRL’s sheer brand strength along with a prudent long-term strategy renders it a multi-bagger.”
The consensus of 11 analysts tracked by Bloomberg estimates its earnings to grow threefold in the next financial year starting April.
CLSA, with a target close to the consensus, is optimistic on the long-term prospects of the newer businesses like Forever 21 and innerwear of the company, but profitability could be delayed because of higher upfront costs during the investment phase.
ICICI Direct said healthy store addition and enhanced profitability of Pantaloons will help the company. Brand extension, store resizing and improved assortment for Forever 21 could help it recoup recent losses and drastically improve profits, it said.