Analysts at HDFC Securities and Anand Rathi Research noted that the company's dampened Q3 numbers were a result of higher ad spending and newer business investments.
The Aditya Birla Fashion Analysts: Analysts at HDFC Securities upgraded the stock's rating to ‘buy' from ‘add' with a target price of ₹300.
Vaishnavi Mandhaniya for Anand Rathi Research maintained the ‘buy' rating for the stock with a price target of ₹360 – an over 30% upside from the current market price of around ₹250.
The Aditya Birla Fashion Thesis: The Analysts were impressed by the performance of Madura Lifestyles. HDFC Securities noted that the company's 25% year-over-year growth in revenue from operations at ₹3,588 crore was largely driven by revenue growth at Madura. Analysts at Anand Rathi also noted that "Madura Lifestyle brands' resilient performance continued" which posted an 18% YoY growth in revenue.
However, in their research note, HDFC Securities said that the company's profits were disappointing. The company's net profits sunk over 90% to ₹11.2 crore in the December quarter. Both analysts attributed the loss to an increase in ad and marketing spendings and investments into new businesses.
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Anand Rathi Research expects yearly ad spends to continue at around 3.5-4% of sales. The analyst, however, said that Madura brands continued to do well across categories, and the management remains hopeful that the brand’s profitable growth will continue.
Price Action: Shares of Aditya Birla Fashion and Retail were down 0.32% at ₹247.20 to continue its three-session losing streak.
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