Aditya Birla Group targets double-digit growth in fashion sector

Aditya Birla Group is poised to capitalize on the evolving Indian fashion industry through its new "dual growth engines," Aditya Birla Fashion and Retail Ltd (ABFRL) and Aditya Birla Lifestyle Brands Ltd (ABLBL), according to the group's chairman, Kumar Mangalam Birla.

In a statement to shareholders in the latest annual report, Birla highlighted India's projected growth in per capita GDP from 2,500 dollars to over 4,000 dollars within the next five years, which is expected to fuel a phase of aspirational consumption. This growth, in turn, is anticipated to drive a significant shift from the unorganized to the organized retail sector, boosting demand across all fashion categories and spurring brand creation.

The group's strategy is built on the recent demerger of ABLBL from ABFRL and its subsequent listing in June 2025. ABLBL now manages lifestyle brands such as Louis Philippe, Van Heusen, and Allen Solly, along with American Eagle and Reebok. Meanwhile, ABFRL will focus on its retail business under Pantaloons, its digital-first brands through TMRW, and a portfolio of ethnic wear brands, including designer collaborations with Sabyasachi, Tarun Tahiliani, and others. To support this restructuring, ABFRL has secured a "significant capital infusion" of 490 million dollars through a combination of a Qualified Institutional Placement (QIP) and preferential issuance, strengthening its balance sheet for aggressive growth.

The strategic focus for each entity is distinct yet aligned with the group's long-term goal of being present across all major fashion consumption themes. ABLBL aims for consistent double-digit growth in both revenue and EBITDA over the next five years, supported by the planned addition of over Rs 250 stores in FY 2025-26. ABFRL, on the other hand, will prioritize profitability for its Pantaloons retail business, targeting a 300bps improvement in EBITDA margin over the same period, with plans to add 20-25 new stores annually. The company also intends to aggressively expand its Style Up network to over 200 stores by FY 2027-28.

The annual report also provides an overview of the broader Indian apparel market, which reached Rs 9.3 lakh crore in FY25 with an 11 percent CAGR since FY19. It projects the market to exceed Rs 14 lakh crore by FY30, driven by rising disposable incomes, rapid urbanization, and growing brand consciousness. While the industry experienced a moderate recovery in 2024-25, it continues to face challenges such as inconsistent footfalls and subdued urban discretionary spending. However, the report is optimistic that technological advancements like AI-driven recommendations and virtual try-ons will further accelerate growth.