New Delhi: On May 22, 2025, Aditya Birla Fashion and Retail (ABFRL) shares experienced a significant 67% drop on the BSE. However, this decline wasn't due to negative news, but rather a result of the company's demerger process. ABFRL is now splitting into two separate companies, leading to a price adjustment of its shares.
Reasons for the Demerger?
The company is separating Aditya Birla Lifestyle Brands (ABLBL), which will be listed on both BSE and NSE. May 22nd was designated as the record date for the shares, resulting in the substantial change in ABFRL's share price on that day.
Cause of the Share Price Drop?
On May 22nd, ABFRL's share opened at ₹97 on the BSE, down from ₹269.15, representing a roughly 64% decline. It further dipped to ₹88.40 during the day, its 52-week low. It closed at ₹89.85. This drop, however, is a technical adjustment and not indicative of poor performance or losses.
What Will Shareholders Receive?
Eligible ABFRL shareholders will receive one ABLBL share for every one ABFRL share held. For instance, owning 100 ABFRL shares will result in receiving 100 ABLBL shares.
Post-Demerger Brand Distribution?
Prominent brands under ABLBL will include Louis Philippe, Van Heusen, Peter England, Allen Solly, and Reebok. ABFRL will retain brands such as Pantaloons, Style Up, Sabyasachi, House of Masaba, Tarun Tahiliani, TASVA, TCNS Brands, The Collective, Wrogn, and others.
Debt and Funding Plan
As part of the demerger, ₹1,000 crore out of ABFRL's total debt of ₹3,000 crore will be transferred to ABLBL. Furthermore, the company plans to raise ₹2,500 crore in the next 12 months with participation from the promoter group.
The drop in ABFRL's share price is temporary and part of the demerger process. Investors need not panic as they will receive equivalent holdings in the new company. From a long-term perspective, this demerger could benefit both the company and investors.
