Aditya Birla Fashion Stock Nosedives 11% After Flipkart Sells Entire 6% Stake

New Delhi, June 4: The shares of Aditya Birla Fashion and Retail Ltd (ABFRL) fell sharply by 11% after Flipkart Investments, a subsidiary of e-commerce major Flipkart, offloaded its entire 6% stake valued at approximately ₹583 crore via block deals during the market session on June 4. Flipkart had originally invested ₹1,500 crore in ABFRL back in October 2020, aiming to strengthen its foothold in the fashion and lifestyle segment.

The impact of the sell-off was seen on the Bombay Stock Exchange, where the shares of ABFRL briefly fell to 11.49% to an intraday low of ₹76.10 before slightly recovering. At around 2:30 PM, the shares were trading at ₹76.82, down by 10.59%. 

The stake sale involved the disposal of 7.31 crore equity shares at a floor price of ₹79.50 per share, reflecting a 7.6 per cent discount to ABFRL’s previous close of ₹86 on the NSE. The transaction, executed through block deals on both the NSE and BSE, was managed solely by Goldman Sachs, acting as the exclusive bookrunner.

The entire transaction was secondary in nature, with no new equity issuance by ABFRL. This marks a complete exit for Flipkart from its investment in the retail giant.

What’s The Reason Behind Flipkart’s Exit?

Although Flipkart has not provided any specific reason for its sell-off, it is anticipated that constant losses incurred by Aditya Birla Fashion could be the reason. Although ABFRL narrowed its losses to ₹23.55 crore in the fourth quarter of FY25, the 5-year-old investment by Flipkart could have reached its tipping point.

With the increasing demand for online fashion, the 4,000 stores run by Aditya Birla Fashion may become less appealing to customers. Furthermore, with ₹583 crore in its pocket, Flipkart can invest in expanding its e-commerce presence in India.

ABFRL Financial Snapshot

In the fourth quarter of FY25, ABFRL reported a significant improvement in financial performance:

• Net loss narrowed to ₹23.55 crore, compared to ₹266.36 crore in the same quarter of the previous year.
• Revenue from operations grew to ₹1,719.48 crore, up from ₹1,575.12 crore in Q4FY24.

What’s Ahead For ABFRL

Just two weeks ago, ABFRL demerged its lifestyle business into a new company, Aditya Birla Lifestyle Brand (ABLB). The company said that it expects this new entity, which houses brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England, to list on stock exchanges by the end of June 2025.

Although the sell-off is a concern for investors, the company has stated that this deal will have no significant impact on its operations going forward. However, it is expected that the investors will still trade cautiously in the coming days.

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