Morgan Stanley upbeat about Aditya Birla retail twins; targets suggest up to 47% gains in ABFRL, ABLBL

Morgan Stanley is upbeat about Aditya Birla group apparel retailers, with an 'overweight' rating on Aditya Birla Fashion and Retail Ltd (ABFRL) and Aditya Birla Lifestyle Brands Ltd (ABLBL) each. The foreign brokerage's targets for the companies -- ABLBL was demerged from ABFRL earlier this year -- imply potential gains of 22-47 per cent from the current levels.

Morgan Stanley adds ABLBL to coverage universe, Rs 175 target implies 22% upside

Morgan Stanley has initiated coverage on ABLBL with a target price of Rs 175 apiece, citing a good mix of core lifestyle brands and younger brands offering growth potential.

The brokerage expects ABLBL's revenue to grow at 10 per cent CAGR from FY25 to FY28, with an expected gradual improvement in margins and return profile.

According to Morgan Stanley, the defensive discretionary player's stock currently trades at an embedded value-to-EBITDA multiple of 13 times its FY27 estimates, with the opportunity for multiple expansion upon consistent delivery.

Morgan Stanley upgrades ABFRL, Rs 131 target indicates 47% upside

The brokerage has upgraded ABFRL from 'equal-weight' with a target price of Rs 131.

The company, according to Morgan Stanley, is on the cusp of improving fundamentals led by improvements in profitability.

The brokerage also sees the opportunity for a valuation rerating for ABFRL. 

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