Morgan Stanley, Citi cut Aditya Birla Fashion targets by up to 19% after apparel retailer's Q4 results

Aditya Birla Fashion share price: Aditya Birla Fashion and Retail's shares rose on Tuesday in some respite for investors, a day after extending losses to the fifth day in a row following the release of its quarterly numbers. The Aditya Birla group apparel retailer's stock held on to much of its intraday gains on Tuesday after rising as much as 4.9 per cent to Rs 199.1 apiece on BSE.    

Brokerages Morgan Stanley and Citi lowered their target prices for the stock by around 10-19 per cent after the earnings announcement. 

Aditya Birla Fashion Q4 results 

During the market hours on Monday, the company reported a consolidated net loss of Rs 194.5 crore for the quarter ended March 2023 as against a net loss of Rs 32 crore for the corresponding period a year ago. 

The company’s revenue grew 26 per cent to Rs 2,879.7 crore for the three-month period, according to a regulatory filing. 

The company’s margin — a key measure of profitability for a business — declined to eight per cent from 17.6 per cent a year ago. 

The company said that negative operating leverage on the back of sluggish sales impacted its profitability in the March quarter. It also said that the results for the quarter as well as the full year ended March 2023 were not comparable on a year-on-year basis, citing the acquisition of subsidiaries House of Masaba Lifestyle, Aditya Birla Digital Fashion Ventures and Aditya Birla Garments in the January-March 2022 period.

What analysts make of Aditya Birla Fashion after the apparel retailer's Q4 results 

Morgan Stanley maintained an ‘underweight’ rating on Aditya Birla Fashion and reduced its target price for the stock by Rs 19 to Rs 176 apiece.  

The brokerage pointed out that the company's Q4 results fell short of its estimates. It expects Aditya Birla Fashion's net debt to rise in the current financial year, which ends in March 2024.

Citi maintained a 'buy' rating but reduced its target price by Rs 60 to Rs 260. 

Aditya Birla Fashion and Retail shares: Past performance 

Aditya Birla Fashion and Retail shares have lost nearly one-third of their value in 2023 so far, a period in which the Nifty headline index has risen about one per cent. 

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