Stocks to Buy: Two Aditya Birla Group stocks have up to 27% upside, Morgan Stanley says

Shares of Aditya Birla group companies — Aditya Birla Fashion and Retail Ltd. and Aditya Birla Lifestyle Brands Ltd. — were trading with gains of up to 5% on Tuesday, September 9. The rally came after global brokerage firm Morgan Stanley issued a positive note on both stocks.Morgan Stanley upgraded Aditya Birla Fashion and Retail to ‘Overweight’ with a price target of ₹113. This target implies a potential upside of 27% from Monday’s closing level.

The brokerage believes the company is at the cusp of improving fundamentals, led by profitability gains, and sees scope for a valuation re-rating.

It also mentioned Aditya Birla Fashion’s strong positioning in India’s fast-growing luxury segment through its designer-led ethnic and premium businesses.
The brokerage forecasts the company to deliver 14% revenue CAGR and 27% EBITDA CAGR over FY27-28e, adding that at 10 times its estimated FY27 enterprise value-to-EBITDA, the risk-reward looks attractive.Separately, Morgan Stanley has initiated coverage on Aditya Birla Lifestyle Brands with an ‘Overweight’ rating. The brokerage has a price target of ₹175 on the stock, suggesting a further upside of 22% from Monday’s close.

It said that the company has a healthy mix of core lifestyle brands and younger labels, particularly Reebok, that provide growth opportunities.

The brokerage expects 10% revenue CAGR during FY25-28e, along with gradual improvement in margins and return ratios.

At 13 times its estimated FY27 enterprise value-to-EBITDA, Morgan Stanley sees potential for multiple expansion with consistent execution.

In trade, shares of Aditya Birla Fashion and Retail were up 1.18% at ₹89.91, while Aditya Birla Lifestyle Brands rose 2.40% to ₹147.10.