ABFRL reports weaker-than-expected net profit in Q1, FY26
14 August 2025, Mumbai
Driven by sluggish revenue growth, a sharp increase in operating costs and higher depreciaton and amortization costs, Aditya Birla Fashion and Retail (ABFRL) reported weaker-than-expected net profit in Q1, FY26, The company’s consolidated net loss widened to Rs 2.12 billion during the quarter, compared to a loss of Rs 1.61 billion in the same quarter last year and Rs 169 million in the previous quarter.
The net loss was worse than the Street's estimate of Rs 1.69 billion. The company's consolidated revenue from continuing operations increased by 9.4 per cent Y-o-Y and 6.5 per cent Q-o-Q to Rs 18.31 billion, which just met analysts' estimates of Rs 18.29 billion.
In March, the company received regulatory approval to demerge its Madura Fashion & Lifestyle division, so the June quarter performance of that business isn't reflected in these results. The company noted in its earnings presentation that overall market demand was slow, except for a few areas of growth.
The company's revenue growth in the June quarter was limited by a 1 per cent Y-o-Y decline in revenue from its Pantaloons segment, which came in at Rs 10.94 billion. This was partially offset by a 25 per cent rise in the ethnic business segment's revenue to Rs 4.36 billion and a 38 per cent Y-o-Y rise in revenue for the TMRW brand segment to Rs 1.97 billion. According to the investor presentation, Pantaloons' sales growth was impacted by store closures over the past year and the fact that the Eid festival fell in March in 2025, compared to April in 2024.
Aditya Birla Fashion recorded consolidated earnings before interest and tax (EBIT) loss of Rs 1.46 billion for the June quarter, an improvement from the Rs 1.51 billion EBIT loss reported in the same quarter last year. However, key operating costs saw significant increases in the June quarter. The cost of materials consumed increased 2.5 times Y-o-Y to Rs 2.10 billion, and employee benefit expenses rose 20 per cent to Rs 3.03 billion. Other expenses also increased by 18 per cent to Rs 5.80 billion.
The company’s operating performance also benefited from a decrease in expenses related to the change in inventories, which fell to Rs 1.22 billion in the June quarter from Rs 2.55 billion a year ago.
Among non-operating costs, depreciation and amortization expenses rose by 15 per cent Y-o-Y to Rs 3.16 billion, while finance costs declined by 14 per cent to Rs 1.13 billion. The company's consolidated EBITDA, which excludes the impact of depreciation and amortization, increased by 38 per cent Y-o-Y to Rs 1.69 billion in the June quarter, with the EBITDA margin expanding to 9.3 per cent from 7.3 pre cent a year ago.
