ABLBL's 16.21% operating margin masks weak profit conversion
Interest of Rs 86.29 cr and depreciation of Rs 210.25 cr absorbed much of operating profit, even as management highlighted 300+ FY26 store additions.
Filed 01 Aug 2026, 19:20 IST · after market close · Aditya Birla Lifestyle Brands Ltd (ABLBL)
Key takeaways
- Operating profit of Rs 352.34 cr translated into only Rs 54.52 cr of consolidated net profit after Rs 210.25 cr depreciation and Rs 86.29 cr interest.
- The 16.21% operating margin was 1.11 percentage points above the 15.1% median for 95 Consumer Discretionary peers.
- Management said the company added more than 300 gross stores in FY26 while the innerwear business was on a path to breakeven.
Price around the results
Operating profit did not carry through to net profit
The consolidated Q4FY26 result shows a large gap between operating profit of Rs 352.34 cr and net profit of Rs 54.52 cr. Depreciation of Rs 210.25 cr and interest of Rs 86.29 cr were the main charges below operating profit. This makes profit conversion, rather than the operating result alone, the key issue in the quarter.
Margin was ahead of the reported peer median
The 16.21% operating margin was 1.11 percentage points above the 15.1% median among 95 Consumer Discretionary peers that had reported the same quarter. The company therefore sits above the sector benchmark on operating profitability, but the below-operating-line charges materially reduced the benefit in pre-tax and net profit.
Expansion remained the central management message
Management said the company had added more than 300 gross stores in FY26, including more than 75 Allen Solly stores and 50-plus Reebok additions. It also said Reebok launched six Pro-format stores and that emerging-business revenue grew 18% year on year in Q4, led by retail. Management described the innerwear business as being on a path to breakeven and said it had started an aggressive medium-term expansion drive.
The market reaction is still pending
The consolidated results were filed after market close, so there was no market reaction to assess at the time of reporting. The next trading session will provide the first observable response to the margin, profit-conversion and expansion signals.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 |
|---|---|
| Revenue | ₹2,174 cr |
| Other income | ₹15 cr |
| Expenses | ₹1,822 cr |
| Operating profit | ₹352 cr |
| Operating margin (%) | 16.21% |
| Interest | ₹86 cr |
| Depreciation | ₹210 cr |
| Profit before tax | ₹70 cr |
| Tax | ₹16 cr |
| Net profit | ₹55 cr |
| EPS (₹) | ₹0.45 |
Operating margin of 16.21% compares with a Consumer Discretionary sector median of 15.10% across 95 peers that have reported Q4FY26.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Emerging Business revenue grew 18% year on year in Q4, led by strong retail performance.
Guidance & outlook
- The company has started an aggressive expansion engine for the medium term.
- The innerwear business is on a path to breakeven.
Expansion
- The company added more than 300 gross stores in FY26.
- Allen Solly added more than 75 new stores and completed 45 renovations in FY26.
- Reebok launched six stores in its Pro format.
- Reebok made more than 50 gross additions in FY26.
New products
- Allen Solly introduced Travel Chinos as a key product innovation.
- Allen Solly introduced its Madagascar Trails product innovation.
New initiatives
- The company launched VH Innerwear in Shoppers Stop as a complete men's and women's innerwear destination.
- The company onboarded Olympic gold medalist Manu Bhaker as Reebok's new brand ambassador.
- The company shifted its distributor ARS model to direct-to-retailer distribution and onboarded more than 180 retailers.
- The company is using celebrity and sports-led associations to reinforce brand relevance.
Competition
- The company reported among the industry's highest L2L growth rates at 9%.
Problems & risks
- The company described its standalone launch as occurring amid market volatility.
- New Labour Codes created a statutory impact through additional gratuity and compensated absences.
- The revised definition of wages under the Labour Codes caused the statutory impact.
What to watch
- Whether consolidated operating margin holds above 16.21%.
- Whether net profit improves from Rs 54.52 cr as the effects of Rs 210.25 cr depreciation and Rs 86.29 cr interest are tracked.
- Progress of the innerwear business toward the breakeven point cited by management.