Newly listed Aditya Birla Lifestyle aims to invest ₹300 crore every year

Mint

7 days ago

Mumbai/ Bengaluru: Newly listed Aditya Birla Lifestyle Brand Ltd is betting on its multi-brand portfolio to double its revenue and improve profitability threefold in the coming years, according to a senior executive.
'We plan to invest ₹300-odd crore every year, a large part of it will go into the expansion of the retail network," said Ashish Dikshit, managing director of Aditya Birla Lifestyle Brands Ltd (ABLBL), during the company's listing on stock exchanges. It was spun off from Aditya Birla Fashion and Retail Ltd.
Shares of ABLBL fell 4.98% to ₹159.40 on Monday compared with a 0.56% decline in Nifty 50.
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ABLBL has a retail presence of more than 3,250 stores, with 70% of the outlets run by franchisees under an asset-light model. Retail contributes to 60% of ABLBL's revenue, followed by e-commerce at 13-14%, and the rest comes from exports and tie-ups with departmental stores, according to an executive privy to the information.
Post-demerger strategy
Aditya Birla Fashion demerged its Madura Fashion & Lifestyle business into ABLBL to sharpen operational focus and unlock shareholder value, according to the company's information memorandum.
The move, formalised through a scheme of arrangement, aims to streamline the group's fashion portfolio by separating its lifestyle brands, including Louis Philippe, Van Heusen, Allen Solly and Peter England, into an independent company. This structure enables each business to pursue distinct growth strategies and tailor capital allocation.
Post demerger, ABLBL is expected to deploy cash flows more efficiently, expand its brand portfolio with agility and engage more effectively with targeted investor segments.
ABLBL now plans to scale up to 4,500 stores by FY30 and expand average store sizes from 1,400 sq. ft. to 2,000 sq. ft., growing total retail area by 50%. It aims to exceed 1,000 stores each for its four flagship brands, Louis Philippe, Van Heusen, Allen Solly and Peter England. Over 580 of its stores already serve small towns, and more than half its revenue comes from consumers under 35, according to a 23 June note by Motilal Oswal Financial Services Ltd.
The bullish outlook mirrors Boston Consulting Group's estimates that India's overall retail market is likely to grow to $2 trillion within the next decade, up from $820 billion in 2023.
However, the competition in India's fast-growing apparel industry is rising. Tata-backed Trent Ltd, which aims to grow its value brand Zudio by 25% in the coming years, reaffirming chairman Noel Tata's vision of expanding the company 10 times its current size. The brand added 244 stores in FY25 alone and now has 765 outlets across 235 cities.
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ABLBL's fashion format also competes with Ambani-backed Reliance Retail, which has ₹3.3 lakh crore in revenue and has a presence of over 19,000 stores, with brands like Trends, Azorte, Yousta, and partnerships with global labels such as GAP, Superdry, and Balenciaga.
Aditya Birla Lifestyle wants to build India's first billion-dollar brands over the next decade. While the company's larger brands including Louis Philippe, Van Heusen, and Allen Solly are already in the ₹2,000–2,500 crore range, the newer additions of Reebook, Van Hausen and American eagle are poised to 'scale rapidly in the large, under-penetrated and high-growth territories spaces of innerwear, activewear and casuals," said Dikshit.
The company is not looking at any acquisitions in the immediate future, citing reasons of an already diverse portfolio, but remains open to inorganic growth opportunities in the next four to five years.
The company is targeting a revenue growth of around 10% over FY25–28, wrote analysts at Motilal Oswal in the note.
'ABLBL is the largest player in branded apparel by revenue and store footprint, but its execution has been patchy in recent years," MOSL said. The company aims to add 250+ stores annually and aims to double revenue by FY30. It also expects to become debt-free and start dividend payouts by FY28.
According to Motilal Oswal, both gross and EBITDA margins are projected to rise by 80–140 basis points between FY25 and FY28.
The analyst report flags a few areas of concern regarding the newly listed demerged entity.
Muted demand trends, slower momentum in scaling up newer brands such as Reebok and American Eagle, and rising store operating costs could pose challenges. In addition, investors who entered during the demerger or recent fundraising by Aditya Birla Fashion, may choose to exit, creating short-term pressure on the stock.
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