Aditya Birla Fashion & Retail (ABFRL) witnessed a significant surge of 11.93% to Rs 236.95 following the board’s decision to evaluate the vertical demerger of Madura Fashion & Lifestyle business. This strategic move aims to separate the Madura Fashion & Lifestyle business segment (MFL) into a distinct listed entity.

Business Segments Involved

The Madura Fashion & Lifestyle business includes renowned lifestyle brands such as Louis Phillippe, Van Heusen, Allen Solly, and Peter England, along with casual wear brands like American Eagle and Forever 21, sportswear brand Reebok, and the innerwear business under Van Heusen. Demerging these segments will pave the way for two independently listed companies, each with its own capital structure and growth opportunities.

Post-Demerger Focus

High-Growth Segments

Following the demerger, ABFRL will refocus its efforts on high-growth segments driven by various factors such as the shift from unbranded to branded products, premiumization, the rise of super-premium & luxury brands, and the rapid growth of Gen Z-focused digital-first brands. This strategic realignment positions ABFRL to capitalize on multiple high-growth markets, ensuring robust value creation opportunities.

Capital Strengthening

ABFRL plans to raise growth capital within 12 months post-demerger to reinforce its balance sheet, positioning itself for sustained growth and capitalizing on the significant growth potential ahead.

Insights from Leadership

Visionary Perspective

Kumar Mangalam Birla, Chairman of Aditya Birla Group, highlighted the evolution of the fashion and retail business, emphasizing its dynamic growth from 5 brands in 2 categories to a diverse portfolio of over 20 brands across all lifestyle segments. This strategic realignment aims to unlock distinct opportunities for value creation, enhancing long-term stakeholder value.

Operational Autonomy

Ashish Dikshit, MD of Aditya Birla Fashion and Retail, emphasized that each business under ABFRL has operated autonomously under respective CEOs. He underscored the vast potential of the Indian fashion and apparel sector, poised for double-digit long-term growth. The simplified structure positions the businesses well for sustained growth and value creation.

The announcement of the demerger of Madura Fashion & Lifestyle business from ABFRL marks a strategic milestone, unlocking growth potential and value creation opportunities. With a renewed focus on high-growth segments and strengthened capital structure, ABFRL is poised for sustained growth in the dynamic fashion and retail landscape.