Aditya Birla Fashion settles over 11.5% higher on demerger announcement

Stock market today, ABFRL share price: Shares of Aditya Birla Fashion and Retail (ABFRL) jumped as much as 16.86 per cent on the BSE in the intraday trade on Tuesday, April 2, after the company announced on Monday that it will demerge its Madura Fashion & Lifestyle business from the company into a separate listed entity.

The board of ABFRL, at its meeting on Monday, authorised the management of the company to evaluate the vertical demerger of the Madura Fashion & Lifestyle business, according to a company statement.

"The proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities," it said.

The Madura Fashion & Lifestyle (MFL) business consists of four fast fashion brands—Louis Phillippe, Van Heusen, Allen Solly, and Peter England—and two casual wear brands—American Eagle and Forever 21.

It also has a brand license for the sportswear brand Reebok and the innerwear business under Van Heusen, which will be demerged into a separate listed entity, it said.

Aditya Birla Group Chairman Kumar Mangalam Birla said the move is designed towards a more simplified and streamlined architecture to unlock distinct opportunities for value creation and is poised to enhance long-term stakeholder value significantly.

"The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value creation opportunities. As the platform embarks on its next transformational growth phase, there is scope to re-evaluate capital structures to optimise different parts of the portfolio," the chairman added.

The stock eventually settled at Rs 236.15, up 11.55 per cent.

ABFRL's share price history 

The stock of the apparel company has underperformed the Nifty50 index in the past 12 months. The stock has jumped over 12.5 per cent during the period, as against a rise of 29 per cent in the 50-share index.