Mehabe score: 3 G Factor: 3 Piotski Score: 4 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 4.
Description
Aditya Birla Fashion and Retail Ltd. (ABFRL) emerged after the consolidation of the branded apparel businesses of Aditya Birla Group comprising ABNL’s Madura Fashion division and ABNL’s subsidiaries Pantaloons Fashion and Retail (PFRL) and Madura Fashion & Lifestyle (MFL) in 2015.
ABFRL is a part of the Aditya Birla Group, a US$ 48.3 billion Indian multinational, in the league of Fortune 500. Anchored by an extraordinary force of over 120,000 employees, belonging to 42 nationalities, the Aditya Birla Group operates in 34 countries across the globe.
Main Points
Business Divisions
The company is divided into two different divisions:-Site:ABFRLMain Symbol:ABFRL
Stock trades at 200.0, below its 50dma 210.56. However it is trading above its 200dma 189.74. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 210.56.
The 52 week high is at 234.50 and the 52week low is at 120.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– Stock is trading at 6.32 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.00% over past five years.
– has a low return on equity of -9.97% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.199.30 Cr.
-Debtor days have increased from 40.36 to 50.89 days.
-Promoter holding has decreased over last 3 years: -3.12%
Competition
– The industry trades at a mean P/E of 0.0x. Aditya Bir. Fas. trades at the industry’s max P/E of 0.0x. ABFRL trades at a P/E of x
– Industry’s mean G-Factor is 2.9 while the mean Piotski score is 6.0. ABFRL has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is -15.0%. The max 1- month return was given by Aditya Bir. Fas.: a return of -4.08 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 774.0 cr compared to Rs 320.0 cr for period ended Jun 2020, a rise of 141.9%
Company reported negative operating profit of Rs -162.0 cr for period ended Jun 2021. For same period last year, operating profit was -351.0
The EPS for Jun 2021 was Rs -3.95 compared to Rs -1.59 for previous quarter ended Mar 2021 and Rs -4.63 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 5635.0 cr for period ended TTM vis-vis sales of Rs 5181.0 cr for the period ended Mar 2021, a growth of 8.1%. The 3 year sales cagr stood at -11.5%.
Operating margins expanded to 9.0% for period ended TTM vis-vis 2.0% for period ended Mar 2021, expansion of 700.0 bps.
Net Profit reported at Rs -585.0 cr for period ended TTM vis-vis sales of Rs -650.0 cr for the period ended Mar 2021, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1150.0 cr for period ended Mar 2021 vis-vis Rs 662.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -34.0% compared to -10.0% over the last 3 Years. – The stock has given a return of 40% on a 1 Year basis vis-vis a return of 2% over the last 3 Years. – The compounded sales growth on a TTM bassis is -19% vis-vis a compounded sales growth of -10% over the last 3 Years. – The compounded profit growth on a TTM basis is -3% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 13.91% vis-vis 13.95% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 12.45% vis-vis 11.37% for Mar 2021
Conclusion
– has reduced debt. – Stock is trading at 6.32 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.00% over past five years.
– has a low return on equity of -9.97% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.199.30 Cr.
-Debtor days have increased from 40.36 to 50.89 days.
-Promoter holding has decreased over last 3 years: -3.12%
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 210.56 and is trading at 200.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
