February 22, 2024

Impartial

Motilal Oswal’s analysis report on Aditya Birla Style

ABFRL introduced the acquisition of TCNS clothes in a two-step deal for a complete worth of INR29b, i.e., 10% beneath its present market cap of INR32.2b with INR16.5b of money payout for 51% stake and 5.4% dilution for the remaining 49% stake. With a comparatively low web debt of INR25m, the corporate’s valuation by way of EV/Gross sales and EV/EBITDA for FY23E at 2.3x/66.5x. Assuming a restoration to eight% EBITDA margin (Pre IND-AS 116) in FY25E, a center floor from the present 3.5% and 16% in FY20, TCNS can be valued at 22.6x EV/EBITDA much like ABFRL’s FY25E EV/EBITDA (pre IND-AS 116) of 22x on the present worth.

Outlook

Nonetheless, the acquisition may probably have an 18% impression on EPS (i.e., INR0.7 impression on EPS). Subsequently, we revise our score to Impartial with a TP of INR245.

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Aditya Birla Style – 08 -05 – 2023 – moti