Apparel Stock Falls Over 8% After Dismal Q1 Results, Should You Buy, Sell, Or Hold?

Large cap stock operating in retail sector, Aditya Birla Fashion and Retail Ltd witnessed a decline of over 8% intraday today after the company posted poor quarterly results on Friday. Current market price of Aditya Birla Fashion share is Rs 196.10 apiece on BSE with intraday fall of 6.73% till 11:30 am.

The company on August 4, 2023 declared consolidated net loss at Rs 161.62 crore for the first quarter ended June 30, 2023 as compared to a profit of Rs 94.44 crore in the same period of last fiscal, as per its BSE filing. Currently, Aditya Birla stock is trading 6% away from its 52-week low price of Rs 184.40 apiece. Check details below:

Aditya Birla Fashion Stock Performance & Return Over Years: Current market price of the large cap retail sector stock is Rs 195.95 apiece. Its 52-week high price is quoted at Rs 359.40 apiece and 52-week low price is Rs 184.40 apiece, respectively. The company has a market capitalisation of Rs 18,592.44 crore. In last 6-months, Aditya Birla Fashion shares declined 22%, fell 30% in last 1-year, and gave return of 62% in last 3-years.

Aditya Birla Q1 Results: Its total revenue from operations surged 11% YoY to Rs 3,196.06 crore in the quarter under consideration as against Rs 2874.76 crore in same quarter of last fiscal. Meanwhile, operating profit, calculated as Earnings before interest, taxes, depreciation, and amortization (EBITDA), declined 37.6% to Rs 292.3 crore as against Rs 468.5 crore in the year ago period. The company declared its margins at 9.1% against 16.3% on-year. According to reports, it added 28 stores on a net basis in quarter one. The ethnic businesses added 12 stores to the network as Pantaloons added net 3 stores to its network this quarter.

"ABFRL's store network now 4000+ large and continues to expand," said the company.

Brokerages Opinion: Leading brokerage house, Motilal Oswal has assigned neutral call to Aditya Birla stock with a target price of Rs 190 apiece. According to the analyst, sluggish demand in the apparel industry coupled with heavy investments in new business might put pressure on Aditya Birla's earnings in the next 4-6 quarters.

Meanwhile, ICICI Securities downgraded Aditya Birla stock to hold call and revises the target price to Rs 200. Earlier, the target price was Rs 210 apiece.

Nuvama Institutional Equities has given buy call to Aditya Birla stock and upgraded the target price marginally to Rs 257 (earlier Rs 253 apiece). The brokerage firm slashed EBITDA estimates by 8% for FY24.

Disclaimer: The stock has been picked from the brokerage report of ICICI Securities, Motilal Oswal, and Nuvama Institutional Equities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.