Aditya Birla Fashion and Retail (ABFRL) shocked many investors on 22 May 2025 when its share price dropped by nearly 67% on the BSE. From the earlier close of Rs. 269.15, the stock opened at just Rs. 97, and during the day, it even touched a low of Rs. 88.40, which is now the new 52-week low. However, this steep fall is not a sign of a market crash or negative news.
The drop happened due to a price adjustment linked with the demerger of the company’s lifestyle business. The adjustment was planned and announced earlier, and it reflects the separation of a new company called Aditya Birla Lifestyle Brands (ABLBL).
What Is the ABFRL Demerger and Why the Price Adjustment?
In 2024, ABFRL’s board approved the demerger of its lifestyle brands business into a new listed company, ABLBL. This move is part of a bigger restructuring plan to simplify the business and help both entities grow independently.
To decide which shareholders will receive shares of ABLBL, 22 May 2025 was set as the record date. Shareholders who held ABFRL shares by this date will receive 1 share of ABLBL for every 1 share of ABFRL they owned. Because of this, the value of the ABFRL stock had to be adjusted to reflect the removal of the lifestyle brand value from it.
This adjustment made the stock appear to crash, but it is just a technical change.
What Will Each Company Hold After Demerger?
After the demerger, ABFRL will continue with its mass retail and ethnic wear business, including:
- Pantaloons
- Sabyasachi
- Shantanu & Nikhil
- House of Masaba
- Tarun Tahiliani
- Tasva
- TCNS
- Jaypore
- Galeries Lafayette
- Wrogn, Urbano, Nobero, and more
Meanwhile, the new company ABLBL will manage the premium and lifestyle brands like:
- Louis Philippe
- Van Heusen
- Allen Solly
- Peter England
- Reebok
Based on current market expectations, ABLBL is expected to grow by 10–11% annually.
What Happens to ABFRL’s Debt and Fundraising Plan?
As part of this corporate reshuffle, ABFRL will transfer Rs. 1,000 crore out of its total debt of Rs. 3,000 crore (as of 31 March 2024) to ABLBL.
In addition, the company plans to raise Rs. 2,500 crore in fresh capital within the next 12 months. The promoters are also expected to participate in this fundraising.
This financial move is expected to give both ABFRL and ABLBL a better foundation for operating and growing independently.
Disclaimer: This news is for information purposes only. Stock investments involve risk. Always consult a financial advisor before making any investment decision.
