ABFRL demerger: Stock turns ex-date for Aditya Birla Fashion biz; key details

Shares of Aditya Birla Fashion and Retail Ltd (ABFRL) settled at Rs 99 at NSE on Thursday after the company demerged Aditya Birla Lifestyle Brands Ltd (ABLBL) from itself. The spin-off will lead to listing of two separate entities on the exchange as the demerged companies shall be listed on the National Stock Exchange and BSE by next month.

Shares of Aditya Birla Fashion & Retail shall be signalling a nearly 63 per cent fall in its stock price against the previous close at Rs 268.95 on NSE. Similarly, the stock had closed at Rs 269.15 on BSE on Wednesday, settling at Rs NSE on the exchange, indicating a 63 per cent fall in the stock price from the previous close.

This is because of the value of the new businesses subtracted from the stock prices. It is the fair value determined by the market for Aditya Birla Fashion & Retail and the value of the resultant entity- Aditya Birla Lifestyle Brands - shall be determined on their respective listing.

Earlier this month, ABFRL had announced May 22 as the record date for the spin-off of the business entities in 1:1 ratio, implying one share of ABLBL for each share of ABFRL held. Only those shareholders who hold the stock as of the record date will be eligible to receive shares of the demerged entities. Investors buying the stock on or after the ex-demerger date will not be considered eligible.

All the existing contracts of ABFRL had expired on Wednesday, May 21 and new contracts have been launched today, from Thursday, May 22. The lot rise of new F&O contract is 2,600 equity shares, said the NSE in a circualar. Trading in the listed entity ABRFL and news F&O contracts shall commence from Thursday, May 22 from 10 am onwards.

The equity shares proposed to be allotted by the resulting company- Aditya Birla Lifestyle Brands- are to be listed with the NSE and the BSE, by mid-June as per some reports. However, the listing is subject to the applicable regulations and the necessary regulatory approvals.

The western wear legacy brands, growth brands like Reebok, American Eagle and Van Heusen innerwear will all be housed under the demerged entity, Aditya Birla Lifestyle Brands Ltd. The demerged entity will also be housing the Madura Fashion, Louis Philippe, Van Heusen, Allen Solly, Peter England.

The currently listed entity, Aditya Birla Fashion and Retail will house brands like Pantaloons, the Ethnic Segment housed under TCNS Clothing, designer brands of Sabyasachi, Tarun Tahiliani, Masaba, Shantanu-Nikhil, Premium brands like Tasva, Jaypore, and luxury retail brands like The Collective and Galaries Lafayette, which is yet to be launched.

Global brokerage firm Bernstein had projected a fair value between Rs 185-215 for the demerged entity, while for the listed ABFRL entity, the fair value, post demerger, is projected to be between Rs 80 -105 per share. Another overseas brokerage Jefferies saw a fair value of Rs 100 for ABFRL.