Aditya Birla Fashion and Retail Shares Drop 67% on Demerger Record Date
Shares of Aditya Birla Fashion and Retail Ltd (ABFRL) witnessed a sharp decline of 67% to ₹88.80 on the NSE during Thursday’s session, coinciding with the record date for the demerger of its Madura Fashion & Lifestyle (MFL) business into a separate listed entity.
The drop, while appearing steep, is a result of the stock undergoing a price adjustment following the approved demerger scheme. Under the arrangement, ABFRL shareholders are entitled to receive one equity share of the newly formed Aditya Birla Lifestyle Brands Ltd (ABLBL) for every share held in ABFRL.
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As per the scheme of arrangement sanctioned last year, ABFRL is spinning off its MFL division which includes leading brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England into a standalone company, ABLBL. This move is aimed at unlocking value by creating two distinct entities with independent capital structures and growth trajectories.
The ABFRL stock, which closed at ₹269.15 on Wednesday, opened at ₹97 on Thursday following the demerger adjustment. It later slipped further to an intraday low of ₹88.80, registering a 67% fall from the previous close.
Stripping out the demerger impact, the stock declined 9.4% from its post-adjustment opening price of ₹97, reflecting investor reaction beyond the structural change.
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The demerger is part of ABFRL’s broader strategy to streamline operations and enhance focus on distinct fashion retail verticals. Once listed, ABLBL will house the core Madura business, while ABFRL will continue to operate its portfolio of ethnic wear brands, international fashion labels, and other strategic investments.
Analysts view the restructuring as a move that could unlock shareholder value in the long term, though short-term volatility in the stock is expected as the market digests the transition.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
