Shares of Aditya Birla Fashion and Retail Ltd (ABFRL) leaped 17 per cent on Tuesday morning after the company announced demerger of its fast fashion and retail business into a separate listed entity.
Aditya Birla Fashion's demerger of Madura Fashion & Lifestyle (MFL), which operates fast fashion brands like Louis Philippe, Van Heusen, Allen Solly and Peter England aims to unlock opportunities for value creation. Casual wear brands like American Eagle and Forever 21 are also operated by MFL.
The stock climbed 16.86 per cent to Rs 247.40 on the BSE while on the NSE, it jumped 16.93 per cent to Rs 247.50.
This comes a day after the ABFRL board authorised the company's management to evaluate the vertical demerger of Madura Fashion & Lifestyle business.
"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," ABFRL said.
Following the merger, ABFRL aim to increase growth capital "within 12 months" to strengthen its balance sheet and pursue the large growth opportunity, the company added.