HDFC Securities has commenced coverage on Aditya Birla Lifestyle Brands (ABLBL), following its recent demerger from Aditya Birla Fashion and Retail (ABFRL) in May 2025. The coverage highlights ABLBL’s promising growth trajectory, supported by its portfolio of legacy and emerging brands, including Louis Philippe, Van Heusen, Allen Solly, Peter England, Van Heusen Innerwear, Reebok, and American Eagle.
HDFC Securities predicts significant financial growth for ABLBL over the next few years.
The brokerage forecasts a compound annual growth rate (CAGR) in revenue and EBITDA of approximately 10% and 19% respectively, over the financial years 2025 to 2028. This growth is underpinned by expectations of improved margins, stemming from better full-price sales, a 5% same-store sales growth (SSSG) in lifestyle brands, a shift towards retail channels, and the maturation of emerging brands into profitable ventures. ABLBL’s EBITDAM is anticipated to improve by about 180 basis points to 8.9% by 2028.
HDFC Securities has issued a ‘Buy’ recommendation with a sum-of-the-parts (SOTP) based target price of Rs 180 per share. This valuation includes a 25x Sep-27 EV/EBITDA for lifestyle brands and 1x Sep-27 EV/sales for emerging brands. The analysis is grounded in ABLBL’s strategic expansion plans, which aim to double the company’s scale by 2030 while achieving an EBITDAM exceeding 11%.
ABLBL management has set ambitious targets to become debt-free in the next two to three years and to enter a dividend distribution phase soon thereafter. The company plans to expand aggressively, aiming to add 250 stores annually across various formats. This would increase its store count to 4,500 and total retail space to 7.3 million square feet by 2030. Presently, about 70% of ABLBL’s retail outlets operate under a franchise model.
The lifestyle brands inherited from ABFRL, including Louis Philippe and Van Heusen, remain the key revenue generators for ABLBL, with the management aiming for a 10-15% CAGR over FY24-30. However, HDFC Securities adopts a more conservative estimate, projecting a 9.4% CAGR over FY25-28. This growth will be driven by a balanced strategy of store expansion and steady SSSG.
The execution of growth strategies, particularly for emerging brands like Van Heusen Innerwear, Reebok, and American Eagle, will be critical. The innerwear segment, affected by an unfavourable inventory cycle, is expected to recover by FY26. Meanwhile, Reebok, having doubled its scale since its acquisition, and American Eagle are poised for further expansion, albeit at a more measured pace.
HDFC Securities remains cautious in its projections, reflecting on its history of tracking ABFRL pre-demerger. On a consolidated basis, ABLBL is expected to achieve a 10% revenue and 19% EBITDA CAGR over FY25-28, with margin expansions of 180 to 250 basis points. The company’s return on invested capital (RoIC) is also predicted to improve from 9% to 11.2% during this period.
The future trajectory of ABLBL hinges on its ability to effectively execute its growth strategies and manage the challenges associated with scaling emerging brands. The company’s focus on expanding its retail footprint and enhancing brand value is expected to support its long-term financial objectives. HDFC Securities’ coverage underscores the firm’s confidence in ABLBL’s potential as a standalone entity post-demerger.