Aditya Birla Fashion & Retail (ABFRL) has announced its financial results for the first quarter of fiscal year 2026, showcasing resilient growth amidst a challenging market environment.

Revenue Growth and Profitability

ABFRL reported a consolidated revenue of ₹1,831.00 crore for Q1 FY26, marking a 9% increase from ₹1,674.00 crore in the same quarter last year. The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a significant jump of 38% year-on-year, reaching ₹169.00 crore compared to ₹123.00 crore in Q1 FY25. This robust performance led to an EBITDA margin expansion of 200 basis points, improving from 7.3% to 9.3%.

Segment Performance

The company's growth was primarily driven by its ethnic wear and digital-first brands:

• Ethnic businesses grew by 25% year-on-year, with the designer-led brand portfolio showing an impressive 79% growth.
• TMRW, ABFRL's digital-first fashion portfolio, delivered a strong 38% year-on-year growth.
• The Pantaloons segment reported a marginal decline in revenue, primarily due to store closures over the past year and the shift of Eid festivities.

Profitability Improvements

ABFRL's focus on operational efficiency yielded positive results across its portfolio:

• The ethnic brands segment saw a significant margin improvement of approximately 1600 basis points, turning EBITDA positive this quarter.
• Pantaloons and TMRW maintained their margins compared to the previous year.

Network Expansion

The company continued its retail expansion strategy, adding over 30 stores during the quarter. ABFRL's total retail area now spans 7.4 million square feet, representing a year-on-year addition of about 260,000 square feet.

E-commerce Growth

ABFRL's e-commerce sales grew by over 20% year-on-year, excluding TMRW. When including TMRW, the growth in e-commerce sales stood at over 28%, highlighting the company's strong digital presence.

Key Brand Highlights

• Sabyasachi and GFPL (Goodview Fashion Private Limited) delivered approximately 40% Like-to-Like (LTL) growth.
• TASVA, the men's premium ethnic wear brand, saw a 72% year-on-year sales growth and an impressive 39% LTL growth.
• The Collective, ABFRL's luxury multi-brand retail format, maintained double-digit profitability.

Management Commentary

Ashish Dikshit, Managing Director of ABFRL, stated, "The quarter marked a positive shift in momentum, supported by a vibrant wedding season and strong brand performances that continue to fuel our growth engine. Having maintained profitable growth over multiple quarters, we are confident in continuing this trajectory."

Future Outlook

ABFRL remains focused on delivering sustainable, profitable growth by building market-leading brands and fostering innovation. The company aims to stay ahead in the evolving fashion and lifestyle market through agile, digitally enabled business models driving its consumer-centric proposition.

In a significant development, ABFRL's tech-led venture TMRW received its first external investment of approximately ₹437.00 crore from ServiceNow Ventures. This investment is expected to enhance TMRW's tech platform with ServiceNow's AI and automation capabilities.

As ABFRL continues to navigate the dynamic fashion retail landscape, its diverse portfolio and strategic initiatives position it well for future growth and market leadership.

Flipkart Investments Pvt. is set to divest its entire 6% stake in Aditya Birla Fashion & Retail Ltd (ABFRL) through a block deal, marking a significant move in the Indian retail sector. The e-commerce giant is offloading 7.3 crore shares of ABFRL, with Goldman Sachs serving as the bookrunner for this high-profile transaction.

Block Deal Details

The floor price for the stake sale has been established at Rs 79.50 per share, representing a 7.6% discount to ABFRL's previous closing price. This pricing strategy could potentially attract investors looking for an entry point into one of India's leading fashion retail companies.

Impact on ABFRL

This divestment by Flipkart could have several implications for ABFRL:

1. Change in Ownership Structure: The exit of a major stakeholder like Flipkart may lead to a shift in the company's ownership dynamics.
2. Market Perception: The sale might influence market sentiment towards ABFRL, potentially affecting its stock price in the short term.
3. Strategic Implications: Flipkart's decision to sell its entire stake may prompt questions about the future strategic direction of both companies.

Broader Market Implications

The block deal highlights the evolving landscape of India's retail and e-commerce sectors. It underscores the fluid nature of partnerships and investments in this rapidly changing market.

Investors and market analysts will be closely watching this transaction, as it could provide insights into the valuation of fashion retail businesses in India and the strategic priorities of major players like Flipkart.

As this story develops, stakeholders will be keen to understand the motivations behind Flipkart's exit and any potential new investors that may step in to acquire this significant stake in ABFRL.