Brokerage firm Motilal Oswal has kept a Neutral rating on Aditya Birla Lifestyle Brands with a price target of ₹110. The company expects double-digit revenue growth driven by store expansion and operational improvements in its emerging brand portfolio.
Aditya Birla Lifestyle Brands Limited (ABLBL) is currently focusing on scaling its lifestyle brand segment, which remains a key contributor to its earnings and cash flow. In a recent report, brokerage firm Motilal Oswal maintained a Neutral stance on the stock, setting a price target of ₹110. This outlook reflects a balance between the company's growth plans and its current operational performance.
The company’s strategy for growth centers on expanding its physical retail presence, with plans to add approximately 300 new stores. This expansion is expected to be supported by steady sales performance in existing stores and stabilization across wholesale and online sales channels. Management is targeting double-digit revenue growth for the fiscal year, with analysts projecting long-term growth in revenue, operating profit, and adjusted net profit over the next few years.
A significant part of the company's future performance depends on its emerging brands. The management expects Van Heusen Innerwear to achieve a sustainable breakeven point within the next 12 to 18 months. Additionally, the company is looking to benefit from operational scale by growing its Reebok business, which is expected to help improve overall profit margins.
Financial discipline remains a key focus for the company. After accounting for annual capital spending of approximately ₹3 billion, the company is projected to generate annual free cash flow between ₹4 billion and ₹5 billion. The company intends to use this cash to reduce its debt levels and potentially increase shareholder returns through dividends.
Investors may monitor the progress of these expansion plans and the ability of emerging brands to contribute to profit margins. The company’s ability to maintain consistent double-digit growth and improve its profit margins will be important for market sentiment moving forward. The final valuation and stock performance will depend on these operational targets, as well as broader demand trends in the retail sector.