Aditya Birla Fashion & Retail Q2 Review - Margin Surprises As Demand Recovers: ICICI Securities
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ICICI Securities Report
Aditya Birla Fashion and Retail Ltd.’s Q2 FY22 consolidated Ebitda margin expansion of 100 basis points versus pre-Covid-19 was ahead of our /consensus expectations despite 89% pre-Covid-19 revenue recovery, led by strong cost control and rent concessions.
Lifestyle brands saw 92% pre-Covid revenue recovery with retail channel sales 25% ahead of pre-Covid levels, while Pantaloons witnessed slower revenue recovery (73% of pre-Covid levels).
As highlighted in our recent note, margins to surprise as demand bounces back, we believe earnings of apparel brands and retail companies may surprise positively led by faster-than-expected demand recovery and expect consensus to turn more constructive with Q2 FY22 management commentary.
Factoring in better demand recovery, we increase our FY23E-FY24E Ebitda/profit after tax of Aditya Birla Fashion by 5-7%.
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