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Block deal: ABFRL shares drop 9% on high turnover, Flipkart Investments likely seller

Block deal: ABFRL shares drop 9% on high turnover, Flipkart Investments likely seller

ABFRL share price: The stock fell 8.93 per cent to hit a low of Rs 78.30 on BSE. On NSE, the stock clocked a turnover of over Rs 1,075 crore by 9.21 am.

Amit Mudgill
Amit Mudgill
  • Updated Jun 4, 2025 9:31 AM IST
Block deal: ABFRL shares drop 9% on high turnover, Flipkart Investments likely seller ABFRL shares:The significant stake sale comes as shares of ABFRL have recently started trading as an ex-lifestyle business.
SUMMARY
  • Flipkart sells 7.32 crore shares in ABFRL at 7% discount to closing price
  • ABFRL's stock fell sharply amid significant stake sale on BSE
  • Post-demerger, ABFRL to focus on value fashion and digital-first brands

Shares of Aditya Birla Fashion & Retail Ltd (ABFRL) fell nearly 9 per cent in Wednesday's trade amid a likely selling of up to 7.32 crore shares or 6 per cent stake by Walmart-owned Flipkart Investments Private Limited through a block deal valued at approximately Rs 580 crore. The floor price for the transaction was set at Rs 79.50 per share, which represented a 7 per cent discount to ABFRL's Tuesday's closing price. Goldman Sachs acted as the broker, sources told Business Today. 

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The stock fell 8.93 per cent to hit a low of Rs 78.30 on BSE. On NSE, the stock clocked a turnover of over Rs 1,075 crore by 9.21 am. The significant stake sale comes as shares of ABFRL have recently started trading as an ex-lifestyle business. The company now primarily comprises Pantaloons, Styleup, ethnic brands, luxury retail, and digital-first brands. 

JM Financial recently maintained a 'Hold' rating on ABFRL's stock. According to the brokerage, post-demerger, ABFRL will focus on driving growth led by value fashion and new-age digital brands with improved margins.

"Post the demerger, we expect the value of the demerged ABFRL to be Rs 103 (18 times EV/Ebitda to Pantaloons, 3 times EV/Sales to ethnics, and 1 time EV/sales to digital brands on March 2027). We expect the ABLBL value to be Rs 186 (23 times EV/Ebitda to lifestyle brands and 10x EV/Ebitda to other business on March 2027)," JM Financial stated.

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ABLBL, the newly formed entity, is expected to list its equity shares by mid-to-end June 2025. The entity will focus on achieving stable growth and healthy profitability. Notably, the ABLBL portfolio includes prestigious lifestyle brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England.

"Lifestyle brands are expected to witness stable growth rate led by network expansion and mid-single digit SSSG growth, while the other brands like Reebok and Van Huesen Innerwear will do the heavy lifting for driving future growth," noted JM Financial. The business will start with nominal debt, aiming to become debt-free over the next 2-3 years.

"At an aggregate level, it aims to nearly double its revenue (11 per cent+ CAGR) and triple its cash profits over FY24-30 led by 300 bps Pre-Ind AS Ebitda margin expansion to 11 per cent+ led by operating leverage and other businesses turning profitable," JM stated. This expansion is projected to significantly boost the return on capital employed (ROCE).

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Furthermore, ABFRL will have net cash of Rs 140-150 crore, regarded as sufficient to fund future growth plans. The company may also consider additional fundraising for growth initiatives, including mergers and acquisitions, without seeking further funding from ABFRL, according to JM Financial's analysis.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 4, 2025 9:26 AM IST
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