Morgan Stanley initiates coverage on newly-listed Birla stk

Morgan Stanley is bullish on two Aditya Birla Group retail companies, with the brokerage on Tuesday initiating coverage of Aditya Birla Lifestyle Brands Ltd (ABLBL) with an “Overweight” rating and upgrading Aditya Birla Fashion and Retail Ltd (ABFRL) to the same, saying both were poised for valuation re-ratings as fundamentals improve.

Birla Lifestyle: A defensive play with growth potential


Morgan Stanley said it views ABLBL as a “defensive discretionary play” and began coverage with an “Overweight” and a price target of Rs 175, implying a 23% upside. The brokerage highlighted ABLBL’s portfolio of core lifestyle labels such as Louis Philippe, Van Heusen, Allen Solly, and Peter England, alongside younger growth brands including Reebok and American Eagle.

“We expect it to deliver a 10% revenue CAGR, F25–28e, with gradual improvement in its margins and return profile,” the brokerage said. The stock, which listed in June after demerging from ABFRL, was trading at 13 times F27e EV/EBITDA, with “opportunity for multiple expansion upon consistent execution delivery.”

On Tuesday, ABLBL shares rose as much as 5.2% to Rs 151.20 on the BSE. The stock debuted at Rs 167 on the NSE on June 23.

ABFRL: “Anti-consensus self-help story”


The brokerage also upgraded ABFRL to “Overweight,” calling it an “anti-consensus self-help story” with room for profitability improvement. It set a new price target of Rs 131, representing a 53% upside potential.

Shares of ABFRL climbed as much as 3.9% on Tuesday to Rs 92.34 on the BSE. The company houses brands spanning mass-market retail, premium ethnic wear, and designer-led labels, with Pantaloons accounting for 59% of revenue and ethnic wear 27%.

Recent earnings


ABLBL reported a profit of Rs 24.06 crore in the first quarter of FY26, up from Rs 22.93 crore a year earlier, while revenue grew to Rs 1,840.58 crore from Rs 1,784.47 crore. Lifestyle brands, which make up 85% of the company’s business, expanded 6% year-on-year, though ecommerce sales fell 19% to Rs175 crore.

Meanwhile, ABFRL posted a consolidated net loss of Rs 161 crore in Q1 FY26 despite revenue growth of 7% to Rs3,428 crore. Its Pantaloons business reported quarterly sales of Rs 1,101 crore, with EBITDA rising 43% year-on-year on margin expansion driven by better markdown management.

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