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Aditya Birla Fashion share price jumps 15% on demerger plan

Aditya-Birla-Fashion-share-price-jumps-15%-on-demerger-plan

Aditya Birla Fashion and Retail (ABFRL) began the trading session with a gap up and rose by more than 10% from its previous close after the board authorized management to evaluate the vertical demerger of Madura Fashion & Lifestyle (MFL) business from ABFRL into a separate listed company. The authorization for the management of Aditya Birla Fashion and Retail Ltd. (ABFRL) to assess the vertical demerger of the Madura Fashion & Lifestyle business from ABFRL into an independent publicly traded entity was granted by the board of directors on the first day of FY25. As per the proposition, the demerger will facilitate the establishment of two distinct companies that are listed separately. These companies will function as autonomous drivers of creation, possessing unique capital structures and opportunities for value creation that are parallel in nature.

The Madura Fashion & Lifestyle business segment (MFL) will be demerged into a distinct listed entity. This division comprises four lifestyle brands, namely Van Heusen, Allen Solly, and Peter England, in addition to casual wear brands American Eagle and Forever 21, sportwear brand Reebok, and the innerwear business operated by Van Heusen.

Post the demerger process Madura Fashions will be separated from Aditya Birla Fashion, leaving Aditya Birla Fashion with value retail brands under Pantaloons and Style Up, an ethnic portfolio, luxury portfolio with brands like The Collective, Galleries Lafayette, and digital brands. The consequent company will focus on high-growth segments, where there are tailwinds from a shift from unbranded to branded, premiumisation, rise of super premium and luxury, and rapid growth in Gen Z-focused digital first brands.

ABFRL has a network of 4,753 stores across approximately 37,106 multi-brand outlets with 9,781 point of sales in department stores across India. Post demerger, the remaining ABFRL will be focused on high-growth segments where there are tailwinds from a shift from unbranded to branded, premiumization, rise of super premium & luxury, and rapid growth in Gen Z focused digital first brands. This is an attractive portfolio comprising of multiple high growth segments in large addressable markets with strong value creation opportunities.

The post-demerger portfolio of ABFRL would consist of -

Value Retail - Value & masstige fashion retail play under Pantaloons & Style Up

Ethnic Portfolio - One of India’s most comprehensive ethnic wear portfolio covering multiple occasions, price points and consumer segments, including designer wear portfolio

Luxury - A fast-growing bridge to luxury & luxury platform of The Collective, Galleries Lafayette & select luxury brands

ABFRL made gap up opening at Rs. 232 following the news and reached intraday high of Rs. 247.50, up approx 15% and is currently trading at Rs. 236.25.

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