Loss-making Aditya Birla Fashion and Retail Limited (NSE:ABFRL) is expected to break even


With the company potentially at an important stage, we thought we’d take a closer look Aditya Birla Fashion and Retail Limited’s (NSE:ABFRL) future prospects. Aditya Birla Fashion and Retail Limited manufactures and distributes fashion apparel and accessories in India. On March 31, 2022, the company with a market capitalization of ₹254 billion recorded a loss of ₹1.1 billion for its latest financial year. Many investors are wondering about the rate at which Aditya Birla Fashion and Retail will make a profit, with the big question being “when will the business break even?” Below, we’ll provide a high-level summary of industry analysts’ expectations for the company.

Check out our latest analysis for Aditya Birla Fashion and Retail

The consensus of 15 Indian luxury analysts is that Aditya Birla Fashion and Retail is close to breaking even. They forecast the business to incur a terminal loss in 2022, before generating positive profits of ₹3.1 billion in 2023. Hence, the business is expected to break even about 12 months from now or less. We calculated the rate at which the business must grow to reach the consensus forecast predicting breakeven within 12 months. It turns out that an average annual growth rate of 101% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company could become profitable much later than analysts predict.

NSEI: ABFRL Earnings Per Share Growth May 22, 2022

Developments underlying the growth of Aditya Birla Fashion and Retail are not the focus of this general overview, however, consider that overall a high growth rate is not unusual, especially when a company is in an investment period.

One thing we would like to highlight with Aditya Birla Fashion and Retail is its relatively high level of debt. Generally, the rule of thumb is that debt should not exceed 40% of your equity, which in the case of Aditya Birla Fashion and Retail is 44%. Note that higher debt increases the risk of investing in the loss-making business.

Next steps:

There are too many aspects of Aditya Birla Fashion and Retail to cover in a brief article, but the fundamentals of the business can all be found in one place – Aditya Birla Fashion and Retail’s company page on Simply Wall St. We’ve also put together a list of key aspects you should look into:

  1. Evaluation: What is Aditya Birla Fashion and Retail worth today? Has future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Aditya Birla Fashion and Retail is currently undervalued by the market.
  2. Management team: An experienced management team at the helm boosts our confidence in the business – take a look at who sits on the board of Aditya Birla Fashion and Retail and the background of the CEO.
  3. Other High Performing Stocks: Are there other stocks that offer better prospects with a proven track record? Explore our free list of these great stocks here.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.


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