- 08 Aug 2022
- ICICIdirect Research
ABFRL posts smart recovery across segments; Lifestyle brands continue to outperformABFRL - 211 Change: -5.65 (-2.60 %)
News: ABFRL reported a strong operational performance with comprehensive beat across all fronts. On a favourable base, revenue grew by 254% YoY to Rs 2874.8 crore (I-direct estimate: Rs 2705 crore, (three year CAGR: 12). The accelerated trajectory was on the back of robust growth in Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe and Peter England) with revenues increasing 249% YoY to Rs 1519 crore (three year CAGR: 15%). Pantaloons division reported revenue growth of 367% YoY to Rs 1027 crore (three year CAGR: 5%). Owing to better product mix , price increases and delay in EOSS, gross margins improved ~510 bps YoY to 55.8%. Despite fixed overheads returning to normal levels, company reported healthy EBITDA margins of 16.3% (I-direct estimate: 15.7%, Q1FY20: 15.2%). Tracking healthy operational performance, PAT came in at Rs 94.4 crore (I-direct estimate: Rs 61 crore) vs. net loss of Rs 351 crore in Q1FY23.
View: Overall revenue recovery rate in Q1FY23 reached 139% of pre-Covid levels (I-direct estimate: 131%). The growth was mainly led by healthy show in Lifestyle brands (~53% of revenues) and smart recovery in Pantaloons segment (36% of sales). While casual wear continued to perform well, there was also a resurgence in demand for formal wear owing to opening of offices. The management expects similar demand momentum to continue in the festive season. We believe ABFRL, with a lighter balance sheet and strong bouquet of brands, is well placed to accelerate the pace of store addition and revenue growth.