Aditya Birla Fashion and Retail Ltd (NSE: ABFRL) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Unidentified Speaker
Jagdish Bajaj — Chief Financial Officer
Ashish Dikshit — Managing Director
Vishak Kumar — Deputy Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Ashish Kanodia — Analyst
Garima Mishra — Analyst
Sangeeta Tanwani — Analyst
Devanshu Bansal — Analyst
Gaurav Jogani — Analyst
Archana Menon — Analyst
Kunal Shah — Analyst
Rajiv Bharati — Analyst
Samir Gupta — Analyst
Rajit Aggarwal — Analyst
Presentation:
operator
Foreign. Ladies and gentlemen, good day and welcome to the fourth quarter earnings conference call of Aditya Birla Fashion and Retail Ltd. The call will begin with a brief discussion by the company’s management on the Q4 FY25 and FY25 performance followed by a question and answer session. We have with us today Mr. Ashish Dixit, Managing Director, ABFRL and ABL Mr. Jagdish Bajaj, CFO ABFRL Mr. Vishak Kumar, Deputy Managing Director and CEO, ABL Mrs. Sangeetha Tanwani, Deputy Director and CEO, Pantaloons I want to thank the management team on behalf of all the participants for taking valuable time to be with us.
I must remind you that today’s discussion may include certain forward looking statements and must be viewed therefore in conjunction with the risk that the company faces. Please restrict your questions to the quarter performance and to strategic questions. Only housekeeping questions can be dealt separately with the IR team. With this, I hand the conference over to Mr. Jagdish Bajaj. Thank you. And over to you, sir.
Jagdish Bajaj — Chief Financial Officer
Thank you. Good afternoon everyone. Welcome to the Q4FY25 earnings call. Thank you for joining us today. We are pleased to report a strong close to what has been a transformative year for our business with culmination of our demerger exercise. This quarter marks the beginning of a new era for Aditya Birla Group’s fashion business as two powerful independent fashion entities now commence their distinct value creation journeys. Let me begin with some key corporate updates for Q4. We successfully completed the demerger creating two focused fashion powerhouses Aditya Birla Lifestyle Brands Limited and Aditya Birla Fashion and Retail Limited both now set on independent high growth trajectories.
The board of ABLBL has allotted shares to all the eligible shareholders of ABFRL as per the record date. These shares will be credited within the next 23 days and ABLBL is on track to be listed by the end of June. We successfully raised USD 490 million of equity capital through QIP and preferential issuance during this quarter. With that we have infused tremendous strength into the balance sheet of demerged ABFRL with an availability of rupees 2,350 crore cash at consolidated level to pursue aggressive growth across its multiple high growth platforms. Now, industry scenario during the quarter continues to see strong macro headwinds with sustained impact on consumer discretionary consumption.
We delivered a resilient performance in this top quarter underpinned by disciplined focus on profitable growth and sharper execution across businesses. Both entities delivered robust Profitability ABLBL cloaking 200 basis points margin expansion while demerl more than doubling its EBITDA coming to the financial performance for this quarter. As you are aware, the Demerger was approved by shareholders on 21 January 2025. Accordingly, ABFRL held ABLBL’s assets as assets held for distribution. As a result, the published financial results reflect a continued operations of demerge, ABFRL and number two discontinued operations pertaining to ABLBL starting with Aditya Birla Lifestyle Brands Ltd.
Our premium Westernwear business and home to some of India’s most loved lifestyle brands, ABLBL continued to demonstrate a robust and profitable growth trajectory with a marked improvement in performance during the second half of the year. In Q4, the business delivered high single digit like to like retail growth driven by consistently robust retail execution, continued product innovation and a sharp focus on enhancing customer experience. At the same time, the company strategically rationalized low margin channels and enhanced the overall quality of its distribution network. Please Note that for ABLBL, depreciation of Rs. 148 crore on discontinued operations was not charged in consolidated financials due to asset classification under the demerger.
However, ABLBL’s own financials reflect full depreciation. ABLBL delivered a Resilient performance in Q4.25 posting Normalized revenue growth of 3% to Rs. 1942 crore post considering intercompany elimination adjustment. Revenue reported under discontinued operations was Rupees18.59 crore. EBITDA is to date Rupees 330 crore reflecting an 18% YoY in growth and the normalized EBITDA margin I.e. x demerger impact of elimination expanded by 200 basis points to reach 17% for the full year. 25 ABLBL reported normalized revenue of Rupees 7830 crore with a normalized EBITDA margin of 16.2%, a 100 basis point improvement over the previous year. Full year revenue under discontinued operations stood at rupees 7619 crore.
The normalized PAT would have been rupees 250 crore versus 168 crore reported. Highlighting the strong underlying profitability of the businesses, below are the adjustments. Gain of rupees 109 crore on account of lower depreciation net of deferred tax liability an exceptional loss of rupees 98 crore on account of discontinued Forever 21 operations, hence net gain of rupees 11 crore rupees 50 crore. Operating losses of Forever 21 was also included in reported EBITDA rupees 50 crore. Higher interest in ABLBL from 1st April 2024 which will not be there next year. Net debt of ABLBL at the end of fiscal stand at rupees 781 crore with repayment targeted within next two to three years.
ABLBL shall be a dividend distributing company at the earliest appropriate opportunity. ABLBL stands today as India’s most formidable premium lifestyle brand platform built on the backbone of strong operational excellence, perfected over years and forwarded by strong brands, innovation led culture and industry leading talent. Let me talk to you about lifestyle brands with one of the strongest and most versatile brand portfolios in Indian fashion industry spanning categories, price points and consumer occasions, brands continues to set the benchmark and redefine industry standards. Our brands sustained their exceptional momentum delivering an industry leading retail like to like growth of 9% in Q4 following a very strong 12% L2L growth in Q3 over a network of 2,900 plus stores.
This marks the third consecutive quarter of positive L2L performance reaffirming the salience of these brands amidst Indian consumers and also highlighting the exceptional quality of retail execution. Revenue for the brands grew by 5% YoY to rupees 1639 crore this quarter with EBITDA margins expanded by 50 basis points to 20% underscoring the business ability to drive profitable growth despite a subdued overall consumption environment. For full year FY25 revenue for branch stood at rupees 6575 crore with EBITDA margin of 19.5%. All our lifestyle brands have earlier surpassed the rupees thousand crore revenue mark with two exceeding rupees 2000 crores making them amongst the very few brands in the Indian fashion industry to achieve such scale.
Other businesses include Reebok, American Eagle and Venus and Innovier posted 3% growth in Q4 revenue performance was marginally impacted by the closure of Forever 21’s offline operations. Importantly, the segment delivered positive EBITDA highlighting the improving profitability profile. Strategic distribution expansion continues to be a critical growth driver for ABLBL businesses over the next 12 months. Leveraging its strong case flows, ABLBL is set to embark on a historic expansion drive with an aggressive retail rollout across its brand portfolios, adding over net 300 stores across the country to accelerate growth and deepen market presence. Now operating as an independent entity post demergers, ABLBL is uniquely positioned to chart its own value creation journey combined with a stable high margin core, a high growth emerging brand portfolio and the strong brand equity with its consumers, the company is strongly positioned to confidently invest in driving growth, innovation and long term leadership in fashion and apparel space.
Let me now explain to you the performance of demerge ABFRL. The demerg Aditya Birla Fashion and Retail Limited continues its strong growth trajectory in Q4FY25 anchored in a clear strategy of profitable scale up across its diverse high potential business segments. With leadership positions across ethnic wear mastige and value retail, luxury, fashion and digital first brands, the company remains well positioned to capture growth in India’s evolving fashion landscape. ABA Apparel’s focused execution translated into both top line growth and significant margin expansion this quarter. In Q4FY25 the company reported a robust 9% YoY revenue growth reaching Rupees17.19 crore.
Comparable EBITDA more than doubled to Rupees 199 crore up 103% versus last year reflecting strong operating leverage and efficiency improvement across segments. Reported EBITDA is today rupees 295 crore with a significant margin expansion to 17.2%. Reported EBITDA includes gain of rupees 97 crore on account of discontinuation of inter division elimination post demerger as company’s financial get reset to report on independent and standalone basis going forward. For the full year FY25 demerg ABFRL posted revenue of rupees 7355 crore registering a 14% increase over the previous year. The comparable EBITDA margin expanded by 220 basis points to 10.3Amidst a challenging consumption environment, DMER’s ABFRL has rupees 2,350 crore cash at concentrated level.
With a sharpened brand portfolio, strong balance sheet and margin momentum, ABFRL is evolving into one of India’s most versatile multi format multi brand fashion platform. Let me first cover Pantaloons Pantaloon segment continued trajectory of margin growth in Q4FY25 reporting revenue of rupees 885 crores which were impacted due to 50 plus stores closure in last 15 months. The business achieved a significant EBITDA margin expansion of 480 basis points reaching 15.1% its sixth consecutive quarter of margin improvement for full year. The segment margin stood at 16.9%. Pantaloon’s format delivered margin of 18% in FY25 highlighting the consistent execution of retail operations across Pantaloon’s network along with lower markdowns, improved private level shares and disciplined cost optimization efforts.
Style Up Our value retail format maintained its strong momentum expanding its footprint to 46 stores with seven new additions during this quarter. The format posted 70% revenue growth for the full year, showcasing growing consumer acceptance and setting the stage for further scale up in FY26. The recent fundraise will be partly deployed to expand the network to over 300 stores in the next three years. Ethnic business Our ethnic wear business has firmly established itself as a powerful growth engine within a BFRL’s portfolio. Today we house the largest and most comprehensive ethnic brand portfolio in the Indian fashion industry spanning designer late in premium segment.
This scale combined with sharp execution and deep consumer resonance has enabled us to consistently deliver double digit growth across quarters. In Q4. FY25, the Ethnic Wear segment reported revenue of Rupees 564 crores registering a robust 90% YoY growth. Profitability also improved sharply with EBITDA margin expanding by 700 basis points to 10.1% supported by margin improvement across the brand portfolios. On full year level, ethnic portfolio revenue stood at rupees 1956 crore. With peak losses behind us, further scaling of the ethnic portfolio shall drive profitability improving going forward. Our designer led ethnic portfolio which includes Sabyasachi Tarun Kalyani, House of Massaba and Santano Nikhil delivered an exceptional 46% YoY growth in Q4 with EBITDA margin exceeding 20% in the quarter.
Most of our designer brands recorded their highest ever quarterly revenue in Q4 as they continue to strengthen their position as India’s leading aspirational fashion houses, reaffirming our strategic thesis of building a distinctive and high potential designer brand portfolio within the premium ethnic wear space. Taswa posted another strong quarter leveraging the peak wedding season to drive over 50% YoY sales growth and 12% like to like growth. The brand continued to strengthen its presence in key wedding markets and build traction with Indian consumers. The current network of around 70 stores is expected to scale to over 200 stores over the next three years.
Meanwhile, TCNs saw a revenue decline during the quarter due to ongoing distribution rationalization. However, the brand reported 4% L2L growth for the full year signaling improving consumer acceptance of new product lines. With the rationalization phase nearing completion and merchandise significantly refreshed, TCNS is now well positioned to deliver sustainable and profitable growth in the medium to long term. We expect to see significant ebitda improvement in FY26 with the TCNS portfolio projected to turn pre index EBITDA positive by FY27 our luxury retail business encompassing the collective and mono brand formats grew by 11% in Q4 FY25, driven by strong E commerce performance, the portfolio had consistently delivered double digit growth accompanied by steadily improving profitability.
Our digital first brand portfolio under tomorrow delivered 27% YoY growth in Q4 along with margin improvement. This sustained momentum reinforced our confidence in the long term potential of digitally native brands as we continue to scale through innovative product offerings, curated offline presence and focused investment in brand equity tailored for young aspirational consumers in India. To conclude, even in a tough consumption environment, our businesses have demonstrated strong resilience with consistent margin improvement across the board. With the demerger behind us, we now stand as too focused well capitalized entities each poised for its own high growth journey.
ABLBL backed by a robust portfolio over 3200 stores and healthy free cash flows is positioned to double in scale and expand margins meaningfully over the next five years. With 300 plus stores already in the pipeline for FY26, ABFRL with a sharpened brand portfolio, a comprehensive diversified play across high growth segment and a gross case balance of rupees 2,350 crore is set to unlock the next phase of growth targeting a three times revenue scale up and two times margin expansion over next five years. Together we are building two future ready fashion platforms. Resilient, profitable and prime for long term value creation.
We are open to questions now. Thank you.
Questions and Answers:
operator
Thank you Mr. Bajaj. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ashish Kanodia, which city? Please go ahead.
Ashish Kanodia
Yeah, thank you for the opportunity. The first question is on the demerg. Now when I look at the guidance you’re talking about doubling the margins. Now full year FY25 post India’s margin is 9% excluding the other income. And if you have to take it to say 18% in the next five years what will drive this? Because pantaloons, you know at an 16 to 17% margins. So you know, do you see what will be the bridge for you know for at a company level going to 18% margin. The second thing on the pantaloons is, you know part of that is the outside view is that when we look at the margin expansion it’s also driven through a closer of this underperforming stores, almost 50 stores in the last 15 months.
Now say in the next one and a half, two years as you start to open new stores what is the sustainable margins for pandalones? And the third question question is on this 97 crore adjustment, is it fair to say that this, you know, inter segment which is now not getting adjusted, this is predominantly sitting only in pantaloons because within pantaloons you would also sell the lifestyle branded merchandise. So is that understanding correct?
Jagdish Bajaj
So Let me take Q3 first. 97 crore is the elimination or writing up of the inventories in line with the purchase price of pentalon. So this is a one time adjustment which was earlier knocked off as a inter unit division. Now it will not be there going forward because both are independent companies and on long term margin guidance and pentalons margin. Ashish.
Ashish Dikshit
Ashish. I think we have put out a longer term guidance for each of our business segments in the last analyst meet that we conducted. It’s in public domain so you can look at some of those numbers to get a reference on that. But coming to demerged EBFRL entity, the primary, I would say the largest uptake in margins will come from turning the businesses which are currently negative EBITDA and taking away from the profitability notably parts of ethnic businesses, TCNs being the largest, Taswa being the second and tomorrow being the other businesses. These are businesses which are actually suppressing the margins that other profitable businesses make and that would be the largest.
Of course there will be margin expansion in some of the other businesses as well. But I think the significant part of this will come from turning around the businesses which are currently loss making. On the question of pantaloons margin Ashish, I think while your observation is correct, we have shut 50 stores. The cumulative impact on EBITDA for these stores is not much. These are a lot of stores have not been shut because all of them are loss making. Many of them have been shut because either they were too small, not in line with the strategy.
Some of them were such that we didn’t feel we’ll be able to turn them around meaningfully enough to profitability. The large part of profit improvement in pantaloons has come from margin expansion which is gross margin expansion which is function of lower markdown which in turn is a reflection of better product apart from better planning. So it’s not that we have shut the stores and therefore margins have expanded. I Think a larger part of margin expansion has come in underlying businesses through more long term sustainable pieces. The margin for the pantaloon segment as we report which includes the style up as you can make out, has moved significantly.
Jagdish mentioned for six consecutive quarters we have shown margin improvement on a full year basis. Also the margins got for the segment closer to 17%. For pantaloons format itself, obviously you would know margins, it’s even higher. I still believe there is a long Runway. I think a lot of good work has happened in pantaloons. But there’s a long Runway currently from where we are for pantaloons also to expand its margin, we think at least 300 basis point improvement from here is pretty much something that we will look to target in next couple of years.
Ashish Kanodia
Sure. Since that’s helpful, I will come back in the queue.
operator
Thank you. Our next question comes from the line of Karima Mishra from Kotak Securities. Please go ahead.
Garima Mishra
Hi. Thank you so much for the opportunity. First question. Dima’s ABFRL has started off with a net cash balance, right? So would this current cash balance be sufficient to fund the planned expansion and investment across the different business segments in this company?
Ashish Dikshit
Yes, Karima, I think as Jagdish mentioned, we are sitting very well capitalized for the growth ambition. Attention please. Sorry, there’s some announcement in the building. Just give us a few minutes.
Garima Mishra
Yep, no worries.
operator
Ladies and gentlemen, would request you to stay connected. Sa. We have the management line connected, so you can go ahead.
Jagdish Bajaj
Sorry, sorry. You know all those who are on call, there were some emergency alarms so we were stuck with that. Ashish, you were explaining about rail capitalization of our company.
Ashish Dikshit
Yeah. Garima, coming back to your question, as Jagdish mentioned, there is sufficient capital close to 2000 crore plus which is lying as a gross cash in the ABFRL subsidiary. You would also know that we are looking to raise capital separately in tomorrow which would be required to fund that part of the business. So we feel adequately capitalized to drive this over next three, four years.
Garima Mishra
All right. And you, you did mention that the process of finding an external investor for tomorrow is on. Is there any timeline you have in mind as to by when you think this process might see some result?
Ashish Dikshit
Sometime this financial year.
Garima Mishra
All right. Okay, Understood. One question on pantanones. So FY25, clearly you know you did see some stored rationalization. What should we expect really for stored additions in FY26 and 24 1.
Sangeeta Tanwani
Hi everyone, this is Sangeeta. So I think while we rationalize and as Ashish explained that stores which were not in line with our strategy are the ones that we have closed, the new stores that we are opening obviously are with a stronger set of guardrails. In terms of the kind of stores that we are opening, we are opening larger stores focused largely on metros and mini metros and Class 1 towns and we expect to open around 15 to 20 stores in the coming year.
Garima Mishra
Understood. Thank you for that. And last question from me again on pantaloons. So of course this year we saw a big EBITDA margin improvement. Can I also get the pre indef EBITDA margin for pantaloons?
Ashish Dikshit
Garma, we’ll declare segment wise pre index margins at a periodic frequency. We do it at the end of every year and we’ll meet that because otherwise it lead to too many numbers and different accounts being seen by different people. Because this could be asked for any segment of our business.
Garima Mishra
So Akish, any number that I could have for FY25, maybe not for the quarter but anything you May share for. FY25
Ashish Dikshit
Garima, I have given at a company as a whole. You know at least from comparable figure it is there in my published results on segmental. Let me work on it. I will come back to you on that.
Garima Mishra
Thank you so much.
operator
Thank you. Our next question comes from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Hi sir, thanks for taking my question. I was referring to this company wise balance sheet that you have provided in the ppt. The networking capital for the demerged DFRL Is@ negative 136 crore. And there are some businesses like TCNS which would be operating at around 200250 crore of working capital. This implies that the working capital for the other businesses is even more negative. So I wanted to check are these sustainable levels and what is the long term assumption that we should work with.
Ashish Dikshit
So I think two parts. One is as you know abfrl, the emerged entity has multiple businesses so they will behave differently as you rightly mentioned different parts of the business. For a regular branded business with small format stores we operate with early double digit networking capital to sales to high single digit are most productive from capital point of view. From working capital point of view our most productive businesses are in the pantaloon segment which is the largest part of this company and that operates with close to zero working in net working capital. A part of it is negative in some quarters.
You’ll get marginally positive. There’s the net balance of these businesses which is what you will see quarter and quarter.
Devanshu Bansal
So currently this negative level at least on our overall basis, at least because pantaloons zero and others are high single digit double digits. So that should be like 5, 6% of sales is a good estimate, right?
Ashish Dikshit
Yeah. Currently it’s negative you can say sir. Which means pantaloons itself is showing negative and pantaloon segment showing negative working capital which is what is driving it.
Devanshu Bansal
Understood. And so from a capex perspective since we are opening about 4050 style up stores, 1520 pantaloons, 25 in Paspa and then TCNs luxury is also expected to accelerate. What is the capex expectation for this demerged ABFRL for next few years?
Ashish Dikshit
About on an ongoing basis close to 400 crores.
Devanshu Bansal
Okay. And this would include galleries as well.
Ashish Dikshit
Will be a one time thing which will become, which will be this year about 100 plus.
Devanshu Bansal
So this year it should be 500 and then 400 is the Sunday.
Jagdish Bajaj
Yeah, 400 crore. Yes.
Devanshu Bansal
And sir, lastly I don’t want segment wise but between pre India’s and post India’s numbers for ABFRL we are seeing that the difference is 13 to 14%. Is this expected to sustain going ahead or can we sort of bake our assumptions based on this 13 to 14% difference?
Jagdish Bajaj
This is a function of you know how many stores are signed and agreed upon. So this time because of our signing was much more. They were 13, 14%. Let me work on it Devansu, we can talk offline going forward.
Devanshu Bansal
And last question from my answer there is this is in reference to the investor day PPT on page number 40 of 205. The style up brand has been placed in the 2000-5000 crore revenue size bracket by FY30. The expansion target is pretty encouraging but aggressive. On the other hand as well I wanted to understand what is the kind of store expansion that we are pursuing for this format for next five years.
Jagdish Bajaj
Angita.
Sangeeta Tanwani
Yeah. Hi Devanshu. So Style up we currently have about 46 stores this year in FY26 we plan to open about another 50 stores. Over the next two to three years we plan to open about close to 250 odd stores.
Devanshu Bansal
Okay, so beyond FY26 we will see accelerated expansion.
Ashish Dikshit
That’s right, yeah. This year we would start with acceleration but you will see much steeper acceleration going forward. And a large part of our capital allocation in the preceding fundraise is meant to drive style up expansion
Devanshu Bansal
Fair enough. Ashish, thanks for taking my question.
operator
Thank you. Our next question comes from the line of Gaurav Jogani with JM Financial. Please go ahead.
Gaurav Jogani
Thank you for the opportunity, sir. Sir, if we are reading the the balance sheet for the EBFRL business. You know the net cash actually comes to around 9.3 billion odd rupees. The net cash that is now of that 9.3 billion odd rupees. If you look at. Yeah. If you look at the capex that you just you know announced that will be around 5 billion or rupees. Now if assuming you know there would be still some losses at the PAT level in FY26. Do you still think, you know that it would suffice for the expansions and the plans going ahead?
Jagdish Bajaj
Yeah. Gaurav, thanks. You know as Asish explained the gross case available with ABFRL demerges 2,300 crore. Right. Then we have a long term loan more you know, which is up to FY30 and 30, you know which will go the repayment go up to 30, 30 first. And then the subsidiary is borrowings. That includes borrowing in tomorrow. Also as. As explained we have a plan to raise separate capital in tomorrow. If I exclude that we have adequate cash and we have well capitalized our company for taking care of the capex working capital and the loss funding for next two years which according to me the losses will be for next two years.
And after that all my businesses will be profit making.
Gaurav Jogani
Sure. So in effect you know there will be. There will be gross debt that will be. That could occur at some point in time. Right? Oh no, you know that. Because as you mentioned, you know while that’s a long term debt that might sustain you might not pay that off. And the tomorrow entity, if there is a fundraise then definitely the debt could come down from that level. Right. If the fundraise is not there you’ll.
Ashish Dikshit
Have to add to the existing net debt number something between 12 to 1500 crores if not more of additional fundraising tomorrow. To look at your calculations, either you do that or you remove moral debt and look at the picture separately. In both cases you will find that there is sufficient capital.
Gaurav Jogani
Sure, sure. So that’s helpful. And sir, the other question you know is now is with regards to the AB label part of the business. I mean the AB label part, you know, you have already mentioned that you know the growth there will be more on a steady state basis that you’re looking and would be largely led by network expansion. So if there in that Interview. If you can help us out, what would be the kind of CapEx? Because if we dissect the CapEx that’s been done this year, I think approximately 3.5 billion odd was done towards the EBFRL entity and approximately 3 billion was still done towards the AB LABL entity.
So. So if you can help us out, you know how the capex would shape up for the coming years in the AB label part of the business.
Jagdish Bajaj
Vishak, will you take this?
Vishak Kumar
Yeah. Hi Gaurav. Gaurav. As you know in the Madura side of business or ablbl, a large part of our expansion is franchisee driven. So we have the option of having the right blend of partnered expansion and franchise expansion this year. Like Jagdish was mentioning earlier, we have planned an aggressive expansion plan which also includes significant capex driven expansion. But that’s a choice that this organization will always have of how much to do as capex own capex driven expansion versus franchise driven expansion. Right. So this year we plan to open about 300 odd stores. Okay. 300 plus stores.
And maybe out of that 200 would be driven by our own capex and rest would be partnered. So that’s the kind of CapEx that we would require.
Gaurav Jogani
Sure. And Vishal, this 200 that you mentioned, the own driven that would be, I’m assuming would be including the Reebok and the venue send evos also.
Vishak Kumar
That’s right. So Reebok includes is included in this van is an innerwear is largely partner driven expansion. There’s not too much of own expansion in the venues and in our business.
Gaurav Jogani
Okay. And has the factory capex, you know that was supposed to be done for this entity. It’s been done or it still will be done incurred in FY26.
Vishak Kumar
Yeah, a large part of it is already complete. So it’s a small part remaining but a large part of the expenses already incurred last year.
Gaurav Jogani
So. So we said would it be prudent to assume, you know, at least similar amount of capex that’s done in 25 to 16 in 26.
Vishak Kumar
Sorry, in. In overall. Are you saying factory. What is. Sorry Gaurav,
Gaurav Jogani
the overall CapEx for the. Overall CapEx for EB label for FY26. Could it be a bit
Vishak Kumar
this year would be more. It would be more in retail, not so much in manufacturing and have Capex, but retail would be more because this year we have chosen to have a significant aggressive expansion. A large part of that you will see in fruition in H2 of this year. So this year would have a much higher retail expansion capex component as compared to last year.
Gaurav Jogani
Sure, sure. And just lastly on the ethnic piece of the business, I mean you know if you can help us out, you know how much profitability on a steady state basis could be expected in the business because you know the, the margins that are, that’s been said are the post in days basis and you know rental being a higher part of this part of the business doesn’t give a true picture of the profitability here. So some color on this directionally could be helpful.
Vishak Kumar
Sorry Gaurav, before I pass it on to the others for the ethnic part just to give you a number in case you’re looking for a number about 250 crores of capex this year in case you wanted that.
Gaurav Jogani
Sure, that was helpful.
Ashish Dikshit
Sorry. Coming back to your question on the ethnic part it clearly has two segments as you can, you know the designer part in the premium ethnic wear business. The designer business because the throughput per stores are very high, the India’s impact is very small and therefore the margins that you see the dilution pre and post index is significantly lesser because rent is a small part of the business. Individual stores have very high throughput on the premium ethnic wear it’s material and that’s where so our designer business would operate in post India in high twenties and pre inde s in high teens to mid teens kind of number.
That’s the goal that we have and most of the businesses are very close to that as a portfolio level for designers for premium business is where TASWA and TCNS are the prime contributors today TCNs is the largest part. Over a period of time Taswa and TCNs will be significant part. That’s where currently we have loss making business. We expect to get to double digit sort of pre index margins in these two businesses over next three to four years and that’s the goal that we have for these currently both these businesses are loss making.
Gaurav Jogani
That’s very helpful Ashish. Thank you.
operator
Thank you. Our next question comes from the line of Archana Menon with Morgan Stanley. Please go ahead.
Archana Menon
Hi. Thank you for the opportunity. A few questions from my side. The first one is on pantaloon so if you could share any update on the whole redesigning and reimaging of tours that has been conducted. So when is this expected to be completed and any initial, you know, positive signs that you’re getting out of it.
Sangeeta Tanwani
So this is one of the key pillars of our strategy as we had also mentioned in the investor meet, delivering distinctive store Experience for our customers. And within that, our store design and redoing our store layouts I think are both very important set of actions that we put in place. So if you look at our Network today, about 400 plus stores, many of them are with the retail identity that we had launched three to four years back. The work that we had talked about is actually refreshing. That and also changing the layouts of some of our existing stores and renovation of stores which we do every year.
The change of layout has already happened in close to about 30 stores. It has just happened about four or five months back as we started this season. And the new retail identity which is going to be again a refreshed retail identity which is on international benchmarks and something that we believe our customers will notice and will be in line with our brand strategy. That is work in progress and that should be rolled out in the next two months.
Archana Menon
Thank you. The second question was in style up. So the value fashion space obviously is very, very competitive right now. So how are you looking to differentiate versus some of your peers?
Ashish Dikshit
Right. So I think clearly there are opportunities that we have identified and which has driven our thesis on style up at this stage. I think too early for us to lay out each one of those elements. I think Sangeetha did cover some of it in our annual presentation that we made. I don’t think we have significant more at this point to reveal.
Archana Menon
Got it. And on the ethnic side for Tatsa, so you mentioned plans to expand to around 200 odd stores. So which markets would this be focusing on? And also if you could share some details around how the older stores are doing in terms of revenue so forth.
Ashish Dikshit
So as you could make out in this market also the business is growing at very high double digit which reflects the sort of positive consumer sentiment that are towards the brand. We would look, we currently have about 65, 67 stores. The remaining stores also would be largely in the bigger cities. We think the capital productivity is much higher in these cities and therefore we’ll operate primarily in top 60 to 70 markets.
Jagdish Bajaj
That’s why.
Archana Menon
Got it. And anything on the revenue throughput for your mature store?
Ashish Dikshit
It’s very different, you know, store in South Delhi versus store in Jaipur. The rents are very different revenue. So there’s no point in harmonizing each of these elements. Obviously these stores are profitable for us to give us the confidence to expand this business. We grew this business by 50% this year last year. We’ll grow by another 50% this year. That’s the kind of momentum we are seeing in the brand.
Archana Menon
Understood. And just last question from me. Any color you can share on how demand trends have been in general over April and May. Are you seeing any signs of a pickup?
Ashish Dikshit
I can’t say. You know underlying demand is very different. Of course there are wedding dates which have come in this quarter versus last year. To that extent the wedding parts of the businesses have the benefit of those dates. But I don’t think that reflects the underlying state of the economy and consumption situation.
Garima Mishra
Understood. Thank you so much for taking my question.
operator
Thank you. Our next question comes from the line of Kunal Shah from Jefferies. Please go ahead.
Kunal Shah
Hi. Thank you for the opportunity. My first question is on pantaloons. So you mentioned opportunity for two 300bps margin expansion over the coming few years. Does this also include any potential say lower margin operations that you’ll have in style up over the coming years or this is just pantaloons format and do.
Jagdish Bajaj
You expect.
Kunal Shah
Losses or lower in style up in the coming years?
Ashish Dikshit
No, I was referring more to pantloon’s margin. This question is more specific to pantaloons format. So I was responding more to Pantloons Style up will have its own journey. Kunal, as I mentioned we have a fairly a large part of our thesis of growth in this company is built around opening up that value end of the market for us. We look to open about 250 to 300 stores as we go forward and a part of that would entail a little bit of margin dilution on this segment itself perhaps in first 12 to 18 months.
Kunal Shah
Understood? Understood. The second question is on ABLBL beyond lifestyle brands. If you see growth has been bit muted for the last few quarters. Now I did hear a comment that it was marginally impacted this quarter by fast fashion business being there in the base. But any sense you can give on which parts of the portfolio beyond lifestyle brands are growing well, which are struggling and what’s, what’s the outlook for the next year?
Jagdish Bajaj
Vishakh, please take this.
Vishak Kumar
Yeah. Hi Kunal. Kunal, if you look at the outside of lifestyle, what we’ve got, we’ve got American Eagle, we’ve got Reebok and we’ve got venison innerwear. Apart from that we also had F21. So significant amount of the sales growth delta that you would see is because we were scaling down F21 and you would see the impact of that. Now if I were to take the other three segments, American Eagle has been on a steady growth path for the year. It’s been a significant double digit growth path. For the year, Reebok is also growing suddenly. Sorry, steadily.
And you would see that in the network expansion over the coming quarters also in Reebok. And it’s a profitable growth expansion. Innerwear has to, you know, we’ve done a lot of initiatives around innerwear to be able to grow that business and it is on its path to profitability in that sense. And that is more important for us than growth per se. So it will be a calibrated growth with a very high focus on getting on path to profitability. So that’s the three big components within the. Within the mix that you will have.
Kunal Shah
Understood. Understood. And finally, for lifestyle brands, retail has done well, but wholesale and others have had a bit of volatile performance over the last few quarters. I know wholesale did well this quarter, but can you give a sense of how do you see next year panning out for both these channels?
Vishak Kumar
If you look at it, if you look at department store business, we’ve had a significant Q4 and I think that momentum should continue through the year. The others, which is largely driven by E Com etc, like I had said last time also we’re trying to see how we can make our overall business more, you know, and take on lines and parts of business which are more profitable. So the what is in terms of greater emphasis on profitable growth than growth per se in some of those segments? I think that trend is something you should see continuing.
So a large part of our growth has to be fueled by retail followed by department stores and other trade businesses. E Com, we will grow. We will grow steadily and we will grow through a profitable growth model. And that’s how we are working with various partners to be able to drive that agenda for profitable growth.
Kunal Shah
Understood? Understood. That’s all from my side. Thank you.
Vishak Kumar
Thanks Gunath.
operator
Thank you. The next question comes from the line of Samir Gupta from iifl. Please go ahead.
Samir Gupta
Hi, good evening everyone and thanks for taking my question. Sir, firstly just wanted some color on Sabyasachi. This is a very large business now within ABFRL and I believe it’s a more profitable business. So growth of 15% in fourth quarter. Can I have the number for FY25? How much it has grown and how do you look at growth in this particular segment going forward? Are you planning to add more stores? Is it all L2L driven something you know on this aspect?
Ashish Dikshit
So as you know, Saby Sachi business operates with very few stores and expansion, while selective is not going to be the primary driver for this business. The business is growing at early double digit this year. But an addition of a store here and there can sort of change the trajectory a little bit over a long period of time. Time we believe this would be closer to 20% growth business over four to five years with few years being higher if you had a store and few years be lower in that most part of the growth of the business will be organic.
It’s a luxury brand, perhaps India’s only true luxury brand born in this country which has a stage and potential to grow globally. We are not trying to rush to this journey because it’s incredibly valuable and luxury brands take their time to grow and we will be patient with that growth.
Samir Gupta
Got it sir. And anything on the pre index profitability here in Sabyasaji very profitable is all.
Ashish Dikshit
I can tell you and I’ll leave it at that. I think we don’t want to give segmental profitability at that level but very very profitable.
Samir Gupta
Fair enough. So let’s look at overall profitability then. EBITDA loss of 180 crore in FY25. Now given where we are do you when do you foresee to break even on this number? Is it FY27? Is it beyond that?
Ashish Dikshit
You are talking of the full company.
Samir Gupta
Abfrl, the demerged entity
Jagdish Bajaj
excluding tcnf, excluding tomorrow. Sorry, excluding tomorrow. We will be EBITDA positive next year.
Ashish Dikshit
I think there is a part of the business because multiple moving parts tomorrow is something that we still have some journey to cover. But I think all other businesses cumulatively and together would be profitable next year. And independently every business would achieve profitability by FY27 with perhaps tomorrow being the only business which might take a year more.
Samir Gupta
Got it sir. One last question if I may on. The. Innerwear portion in ABLBL. Now we’ve been in this segment since 2016 and we are at a ballpark 500, 550 crore of turnover today and it’s still a loss making segment. So first of all I mean do you feel this business the way it has been run over the years, it has met your expectations when you started out initially. And if not, what are the pieces where we are struggling which need work and what kind of ambition do we have here? I know Vishak mentioned the focus is there on profitability but overall ambition in this because this is still a large segment and 500 crore doesn’t really do justice to the scale and capabilities of ABFRL as a whole.
Ashish Dikshit
I think you’ve answered large part of your question. Obviously when we started the business in 2017 the business ambition was much higher. We were expecting to grow and up till Covid period I think we kept that trajectory going. The business has been more, I would say stable as stagnant for last three years which has really been the time in which we have been trying to recover from the kind of expensive plans we have made pre Covid and as the situation emerged we had a lot of inventory build up. So those are corrections that we have done.
I think it doesn’t change our picture on long term view of this business. ABFRL the combined EBFRL business had multiple, multiple growth opportunities. And we realized at some point of time that we’ll have to capitalize it and structure it differently to pursue independent growth opportunities more aggressively. Innerwear was one such I think as it becomes part of a company which is fundamentally profitable free cash flow generator and it’s important part of its growth journey. Innerwear will get the attention which are to would not have got when we had five or six such growth opportunities in front of us.
So you’ll see going forward while medium term, as Vishak indicated, we obviously want to get the trajectory of profitability right. But our ambition about being very competitive in size and scale in this business has not dimmed at all. In fact you will see greater impetus to that. Being part of a company where every other part of the business has very strong and proven business model. This will get the attention that it deserves.
Samir Gupta
Great sir. Thanks. That’s all for me. I’ll come back in the queue. Thank you.
operator
Thank you. The next question comes from the line of Nipin Bora with hsbc. Please go ahead. Nipin, your line has been unmuted. May I request you to unmute your line from your side and go with your question. But there is no response. I would request we move to the next question. Our next question comes from the line of Rajiv Bharti from Nuama. Please go ahead.
Rajiv Bharati
Sir. Thanks for the opportunity, sir. On EBFRL Demerge entity, if you were to add back that 97 crores on. The gross margin side then the gross margin is basically up by close to 300 basis point. And on the post index EBITDA is. You know, adjusting for the same thing. Is up by 410. So the cost of retailing which is gap between the two is up by 130 basis point. And this includes your store closure effort. And also, you know, you said leverage on procurement stuff. But 130 basis points for the entire. Is there more juice left here? Which we probably see in the subsequent quarters or this Is it?
Ashish Dikshit
I think this is. I wouldn’t say any part of this business. This is it because this consists of many businesses with very very different margin trajectory, margin profile. So I would be hesitant to make observation because the mix of businesses in this itself is going to change as we go forward. I think you should look at individual businesses which is why we give segmental results in this which contribute to the overall picture. So it more be driven by the mix of the individual businesses and the improvement within the businesses themselves. So there is a significant improvement possible in this.
Jagdish Bajaj
So Rajiv, what I suggest is you look at my segmental result. The 97 crore has gone into that elimination role. Right? The individual businesses margins improvement. If you see pantaloon margins have gone up from 13% to 16.9. This I explained to you because of one time effect. It’s a inter unit or intra company elimination. Therefore it does not include into the pantaloon segments margin.
Rajiv Bharati
Sure, sure. Sir, just one thing on. On. On your acquisition in the ethnic side. TCNs you said it will be profitable by FY27. Is that right?
Ashish Dikshit
Yeah. Company this question was I think asked around the ABF RL is a full portfolio and in response to that I was saying well the company as a whole EBITDA will be profitable by that individual businesses also be profitable by 527.
operator
Thank you. The next question comes from the line of Rajit Agarwal from Nilgiri Investment Managers Private limited. Please go ahead.
Rajit Aggarwal
Congratulations on good operational performance across both the entities. I just have quick clarifications on two or three items of both ABLBL and abfrl. First is the interest cost which still continues to be high despite the repayment of debt. So you see the run rate same as going forward for the next couple of quarters as well.
Jagdish Bajaj
See the interest cost which you are seeing in both the companies in public result is a factor of financial charge as well as the INDES impact. So financial cost in ABFRL will come down significantly but the index impact will continue. In ABLBL business the finance cost should come down 50 to 60 crore next year but the INDES impact will continue.
Rajit Aggarwal
Okay and can you share similar number for ABFRL as to how much reduction in interest cost can we see?
Jagdish Bajaj
If you see my, you know debt profile you will realize that from a date of 2,000 crore last year in March I am sitting on cash but there will not be any finance charge for this year.
Rajit Aggarwal
Thank you. And on the debt piece itself I mean the expectation on ABFRL was that it would be debt free and that ABL BL would have only 700 crores of debt. Now in both these entities the red numbers are higher than what was earlier mentioned.
Jagdish Bajaj
No, but ABFRL I said that at console level I have cash of 2300 crore. Right,
Rajit Aggarwal
right. I agree. I agree sir. So I’m not, I’m not concerned as such on the total debt or net debt piece. I’m just. One would like to understand how do you see this? I mean the debt will continue on the books and along with the cash of course.
Jagdish Bajaj
Yeah. Because these are long term loan, you know contracted a very attractive rate. So we want to continue and lenders also wanted to have, you know, continuity. So we’ll continue.
Rajit Aggarwal
Fair enough sir. And on the last bit, the depreciation that you mentioned, that 148 crore has not been accounted for. Now if we were to include that 148 crores would that imply that ABL BL would would have shown some loss in Q4?
Jagdish Bajaj
Oh no, no, no. I explained to you that my reported 150. You should read that the PAT normalizes 250 cross abl bill. I’m talking about because the application impact is only in ablbl.
Rajit Aggarwal
Yeah, right. Okay. Also the profit would have been higher.
Jagdish Bajaj
That is right.
Rajit Aggarwal
Okay. Thank you sir. Thank you for the time.
operator
Thank you ladies and gentlemen. That was the last question of the Q and A session. Thank you very much ladies and gentlemen. On behalf of the management, we thank all the participants for joining us. In case of any further queries you may please get in touch with Mr. Amit. You may now disconnect your lines. Thank you.