On May 22, 2025, Aditya Birla Fashion and Retail Ltd (ABFRL) experienced a significant decline of 67% in its share price, falling from ₹269.15 to ₹88.80 during early trading hours. This sharp drop coincided with the record date for the demerger of its Madura Fashion & Lifestyle (MFL) division into a separate listed entity, Aditya Birla Lifestyle Brands Ltd (ABLBL). Despite the dramatic fall, analysts emphasized that this is a technical adjustment reflecting the corporate restructuring, not a deterioration in the company’s fundamentals.
Understanding the Demerger
The demerger involves separating ABFRL’s MFL business, which includes well-known brands like Louis Philippe, Van Heusen, Allen Solly, and Peter England, into ABLBL. Shareholders will receive one equity share of ABLBL for every share held in ABFRL as of the record date.
Impact on Share Price
The apparent 67% plunge in ABFRL’s share price is a result of the stock trading ex-demerger, meaning the value of the demerged MFL business is no longer included in ABFRL’s valuation. Such adjustments are standard practice during demergers and do not indicate a loss in overall shareholder value. Investors will now hold shares in both ABFRL and the newly formed ABLBL, maintaining their investment’s total worth.
Financial Implications
Post-demerger, ABFRL is planning to raise ₹2,500 crore within the next 12 months to strengthen its balance sheet and fund growth initiatives. While the company’s total borrowings stood at ₹3,000 crore as of March 31, 2024, with approximately ₹1,000 crore allocated to ABLBL. This strategic financial planning is expected to enhance operational efficiency and support long-term growth.
Investor Outlook
While the immediate drop in ABFRL’s share price may seem alarming, it is essential to understand that this is a routine market response to the demerger. Analysts advise investors to consider the long-term benefits of the restructuring, which is designed to create focused entities with clearer strategic directions. The demerger is anticipated to unlock shareholder value and provide opportunities for each company to thrive independently.
In summary, the decline of 67% in ABFRL’s share price is a technical adjustment due to the demerger of its MFL division. Investors are encouraged to view this development as a strategic move aimed at enhancing the company’s future prospects rather than a cause for concern.
<p>The post Aditya Birla Fashion Share Drops 67% Amid Demerger—Here’s Why Investors Shouldn’t Panic first appeared on toplivenews.com.</p>
