ABFRL Q2FY26 Results: Revenue Up 13%, EBITDA ₹116 crore

Key takeaways from the quarter

Aditya Birla Fashion and Retail (ABFRL) reported a steady top-line performance in Q2FY26, with revenue rising 13% year-on-year to ₹1,982 crore. For H1FY26, revenue increased 11% year-on-year to ₹3,813 crore. The company said all segments posted strong growth in the quarter, driven by organic performance. TMRW’s portfolio grew 27% year-on-year in Q2, while the luxury business grew 13% versus last year.

Q2FY26 revenue and segment cues

The Q2FY26 update pointed to broad-based growth across ABFRL’s operating businesses. Management flagged that the quarter’s growth was organic, with contributions from multiple segments. Within this, the digital-first platform TMRW reported 27% year-on-year growth in its portfolio. The luxury business grew 13% compared with the same quarter last year, indicating continued traction in premium retail even as discretionary spending remains sensitive.

Profitability: EBITDA grows, margins face ad-spend pressure

ABFRL’s EBITDA for Q2FY26 stood at ₹116 crore, up 7% year-on-year. EBITDA margin came in at 5.9%, which the company said was impacted by higher advertising spends. Specifically, advertisement spends were 200 basis points higher than last year, weighing on the quarter’s margin.

The ethnic business, however, delivered improved operating performance, with EBITDA margin expanding 280 basis points versus last year. This improvement is important because management has separately highlighted ethnic businesses as a key lever in lifting consolidated profitability once loss-making parts are corrected.

H1FY26 performance: stronger EBITDA expansion

For the first half of FY26, EBITDA rose 24% to ₹286 crore. H1 EBITDA margin stood at 7.5%. The stronger EBITDA growth relative to revenue growth in H1 suggests operating leverage in parts of the portfolio, even as the company continues to spend on brand building and expansion.

Cash position and funding headroom

ABFRL said it closed Q2 with gross cash of about ₹2,150 crore. In a separate investor update, the company also referenced more than ₹2,350 crore of gross cash at the consolidated level following recent fundraising. The cash position is relevant as ABFRL plans investments to revive loss-making businesses and fund growth initiatives.

FY26 capex: ₹500 crore to fix loss-making ventures

ABFRL said it will incur capital expenditure of ₹500 crore in 2025-26 to turn around loss-making businesses, including TCNS Clothing and its direct-to-consumer venture TMRW, for which it will also raise funds. The turnaround focus is aligned with the company’s stated goal of improving margins by fixing businesses currently operating with negative EBITDA.

Ashish Dikshit, Managing Director of Aditya Birla Fashion and Retail, told investors the most significant margin uplift would come from turning around the negative-EBITDA businesses, particularly in ethnic wear. He cited TCNS as the largest contributor, followed by Tasva and TMRW, and said these businesses are suppressing the margins earned by more profitable segments.

Profitability roadmap: ex-TMRW breakeven, FY27 targets

Management indicated that excluding TMRW, the group expects to be EBITDA positive next year. Dikshit added that all other businesses together would be profitable next year, and independently every business will achieve profitability by FY27. TMRW is the only business that could take a year more, as per the management commentary shared with investors.

Alongside the turnaround, ABFRL said it intends to pursue rapid growth, aiming to triple its scale and double its profitability over the next five years. The company also noted that the expansion plan comes at a time when consumers are curbing spending on non-essential items.

Corporate structure update: lifestyle division demerger

ABFRL has demerged its lifestyle division, formerly known as Madura Fashion, into a new entity Aditya Birla Lifestyle Brands (ABLBL). The new entity is likely to list on the stock exchanges at the end of June, as per the company’s update. Post-demerger, ABFRL’s portfolio spans multiple segments, including Pantaloons and Style Up, an ethnic wear portfolio, luxury retail through The Collective and mono brands, and the digital-first platform TMRW.

As of 31 March 2025, the company reported a retail footprint of over 7.2 million square feet across India, with 1,187 brand stores.

FY25 context: sales and losses set the backdrop

For FY24-25, ABFRL reported net sales of ₹7,355 crore and a net loss of ₹624 crore. These numbers frame the urgency around margin improvement, particularly in businesses that are currently loss-making and diluting consolidated profitability.

Snapshot table: reported metrics and stated plans

Why the update matters for investors

The Q2FY26 print highlights a familiar ABFRL setup: steady revenue growth alongside margin pressure from planned investments such as higher advertising spends. The management commentary puts sharper focus on the turnaround of TCNS, Tasva and TMRW as the main pathway to sustained margin expansion, since these businesses are cited as suppressing profitability.

The other key variable is capital allocation. With stated capex of ₹500 crore in FY26 and a strong gross cash position cited in updates (₹2,150 crore at the end of Q2 and over ₹2,350 crore consolidated after fundraising), ABFRL has room to fund the turnaround and growth plans, but the pace of profitability improvement will depend on execution in the loss-making units.

Conclusion

ABFRL’s Q2FY26 results showed 13% year-on-year revenue growth to ₹1,982 crore, while EBITDA rose 7% to ₹116 crore and margin softened to 5.9% due to higher advertising spends. Management has tied the next phase of margin improvement to fixing negative-EBITDA businesses such as TCNS, Tasva and TMRW, backed by a ₹500 crore FY26 capex plan. The company’s near-term milestones include the planned listing of ABLBL at the end of June and progress updates on profitability targets, including the stated expectation of EBITDA positivity next year excluding TMRW and business-level profitability by FY27.