Aditya Birla Fashion shares surged by 15% on Tuesday following the company’s announcement of plans to demerge its Madura Fashion & Lifestyle business into a separate listed entity. The share price of Aditya Birla Fashion jumped to intra-day high of Rs 243.45 apiece on the BSE.
The trading session also witnessed heavy volumes, with a total of 3 crore shares changing hands, significantly higher than the one-week average of 30 lakh shares.
Aditya Birla Fashion and Retail Ltd (ABFRL) disclosed on Monday its consideration of a vertical demerger of the Madura Fashion & Lifestyle business into a distinct listed company.
Management on Demerger
“The proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities,” stated the company in an exchange filing.
The demerger, subject to necessary approvals, will be implemented through an NCLT scheme of arrangement, ensuring that all shareholders of ABFRL hold identical shareholding in the newly formed entity.
Following the completion of the demerger, ABFRL plans to raise growth capital within 12 months to bolster its balance sheet.
Ashish Dikshit, MD of Aditya Birla Fashion and Retail Ltd, remarked, “The restructuring will help bring in sharper focus anchored on a differentiated strategy aligned with the individual business segment. Each of these businesses have always been operated autonomously under respective CEOs.”
The simplified structure is expected to position the businesses for sustained growth and value creation.
Kumar Mangalam Birla, Chairman of Aditya Birla Group, highlighted, “The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value.”
Aditya Birla shares have witnessed a gain of over 6% in year-to-date basis, while the stock has risen more than 11% in the past one year.