Aditya Birla Fashion Retail Shares Decline Nearly 67 Per Cent - Know Why

ABFRL Demerger: Shares of Aditya Birla Fashion Retail (ABFRL) shares declined nearly 67 per cent to Rs 88.8 apiece on the NSE on May 22. The stock fell as May 22 is the record date for the demerger of the company's subsidiary Madura Fashion Ltd. Notably MFL will be listed as Aditya Birla Lifestyle Brands Ltd (ABLBL) as a separate entity on the exchanges.

Why Did Aditya Birla Fashion Shares Decline

Shares of Aditya Birla Fashion and Retail fell as the stock traded without the value of ABLBL's business. The share price decline reflects the demerger of the fashion and lifestyle business froim ABFRL as it is factoring in MFL's business into ABFRL's fundamentals.

As a part of the demerger, shareholders who hold shares of ABFRL will receive one equity share of Aditya Birla Lifestyle Brands Ltd (ABLBL) for every equity share held in ABFRL.

"...ABLBL shall issue and allot 1 (One) fully paidup equity share of ABLBL having face value of Rs 10 (Rupees Ten) each for every 1 (One) fully paid-up equity share of Rs 10 (Rupees Ten) each of the Company to the shareholders of the Company whose names are recorded in the register of members and/or records of the depository as on the Record Date (i.e., Thursday, May 22 2025)," ABFRL said in a regulatory filing.

On May 22, the stock opened at Rs 98 apiece, reflecting a decline of over 63 per cent compared to the previous close. However, the stock further declined over 9 per cent to a low of Rs 88.8 from its opening price.

Aditya Birla Fashion Demerger

ABFRL's board of directors approved the demerger of Madura Fashion and Lifestyle (MFL) business into ABLBL. The company will be vertically separated from ABFRL as a part of the demerger. The demerger is aimed at creating two separate listed entities (ABFRL and ABLBL) with independent capital structures. The demerger of the two companies will be carried out via a National Company Law Tribunal (NCLT) arrangement scheme. As a part of the scheme, the NCLT will ensure that ABFRL shareholders hold the same ownership percentages in both the listed companies once ABLBL shares are listed.

As a part of the demerger brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok and American Eagle will become a part of ABLBL. Additionally, Rs 1000 crore of ABFRL's total borrowing will be transferred to ABLBL. ABLBL will also raise Rs 2500 crore in a stipulated span of 12 months following the demerger.

At the time of writing shares of ABFRL traded at Rs 89.65 apiece down by 8.52 per cent on the NSE.