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ABFRL: Lifestyle division outperforms; Pantaloons division recovering at gradual pace

News: On a favourable base, revenue grew 2x YoY to Rs.2054.3 crore (I-direct estimate: Rs.1924.0 crore). The accelerated trajectory was visible for Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe and Peter England) with revenues reaching 92% of pre-Covid levels. Pantaloons division grew 80% YoY to Rs.665 crore with recovery rate reaching ~73% of pre-Covid levels. The slower recovery for Pantaloons is mainly owing to larger share of mall stores that had prolonged restrictions. Sustained rationalisation of fixed overheads and positive operating leverage resulted in company reporting EBITDA (post Ind-AS 116) of Rs.313.5 crore vs. EBITDA loss of Rs.7.6 crore in Q2FY21.

Views: ABFRL reported better than estimated results with strong sequential recovery aided by ease in store restrictions and greenshoots in demand. Overall revenue recovery rate reached 89% in Q2FY22 vs. 45% in Q2FY21. The company’s net debt has reduced from Rs.1200 crore in Q1FY22 to Rs.873 crore, on account of final proceeds of right issues (Rs. 245 crore) and tight control on fixed overheads. Key positive of the result was company reporting profit at the PBT level vs. expected loss.