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ABFRL's Bold Move, Demerger Sparks Market Surge, Paves Way for Specialized Growth

ABFRL's Bold Move, Demerger Paves the Way for Fashion Industry Evolution

23 April 2024


Neelesh Bachani

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  • ABFRL greenlights the demerger of Madura Fashion & Lifestyle into ABLBL, aiming to enhance shareholder value and create two distinct entities.

  • ABLBL emerges as a powerhouse with lifestyle brands like Louis Phillippe, while ABFRL retains value brands like Pantaloons and luxury platforms like The Collective.

  • Post-demerger, ABFRL eyes a Rs 2,500 crore equity capital raise, supported by the promoter group, signaling confidence in its growth trajectory.

 The demerger, set to unfold through an NCLT scheme of arrangement, ensures that all existing ABFRL shareholders will hold identical shareholdings in both ABFRL and ABLBL. Post-demerger, the landscape of the two entities will be sharply defined.

 Aditya Birla Lifestyle Brands Ltd. (ABLBL) emerges as a powerhouse, encompassing renowned lifestyle brands such as Louis Phillippe, Van Heusen, Allen Solly, and Peter England, alongside popular casual wear brands like American Eagle and Forever 21, as well as the iconic sportswear brand Reebok and the innerwear segment under the Van Heusen brand.

 On the other hand, Aditya Birla Fashion & Retail Ltd. (ABFRL) retains its stronghold with a diverse portfolio spanning value brands such as Pantaloons and Style Up, an impressive ethnic and designer lineup featuring names like Sabyasachi, Shantanu and Nikhil, Tasva, luxury platforms including The Collective and Galleries Lafayette, and innovative digital-first fashion brands under TMRW.

 Post-demerger, ABFRL is poised for growth, eyeing a substantial equity capital raise of approximately Rs 2,500 crore within the next 12 months. The unwavering support of the promoter group underscores their confidence in ABFRL's future trajectory and growth potential.

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The demerger process, subject to necessary approvals, is being shepherded by trusted entities including PWC LLP as statutory auditors and AZB as legal counsels. Independent valuations by Bansi S Mehta Valuers LLP and a fairness opinion provided by INGA Ventures Pvt. Ltd. add credibility to the process.

 The fiscal year 2023 witnessed a remarkable surge in ABFRL's revenues, soaring to Rs 12,418 crore from Rs 8,136 crore in the preceding year. Of particular note is the exceptional 46% growth in revenue from lifestyle brands, totaling Rs 6,608 crore. Madura brands and associated businesses played a pivotal role, contributing nearly two-thirds of ABFRL's total revenues, amounting to an annual turnover of Rs 7,959 crore.

 The modest increase in the closure of Aditya Birla Fashion and Retail shares, closing at Rs 231.40, up by 0.81%, reflects the initial market optimism surrounding the proposed demerger and the strategic realignment within the ABFRL conglomerate. This move signals a promising future for both ABFRL and ABLBL, unlocking new avenues for growth and value creation in the ever-evolving fashion and retail landscape.

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