Aditya Birla Fashion Shares Fall 67% Post-Demerger — What’s Behind the Sharp Drop?

In a surprising turn of events on May 22, 2025, shares of Aditya Birla Fashion and Retail Ltd (ABFRL) plunged by nearly 67%, trading at around ₹88.80 on the NSE. At first glance, it seemed like a massive market crash. But a closer look reveals that this drop wasn’t driven by negative news or poor performance — it was the result of a planned demerger.

So, what exactly happened? Why did the share price tank, and should investors be worried? Let’s break it down.


What is the ABFRL Demerger All About?

ABFRL has demerged its Madura Fashion & Lifestyle (MFL) business into a new, separately listed company called Aditya Birla Lifestyle Brands Ltd (ABLBL).

The MFL division includes some of India’s most popular premium apparel brands:

  • Louis Philippe
  • Van Heusen
  • Allen Solly
  • Peter England

This demerger aims to create two focused and independently operated businesses:

  1. ABFRL (now primarily focused on retail and ethnic wear brands).
  2. ABLBL (focused on the branded fashion segment through MFL).

Why Did the Share Price Fall 67%?

The 67% fall is not a stock market crash — it’s a technical adjustment.

Here’s why:

  • When a business demerges, the market recalculates the parent company’s share value to reflect the separation.
  • Since the MFL business now belongs to a separate company, ABFRL’s share price had to adjust downward to reflect the loss of that business unit.
  • Think of it like splitting a pizza into two — the size of one piece shrinks, but now you own two slices instead of one big one.

Shareholder Benefit:

  • For every 1 share of ABFRL, investors will receive 1 share of ABLBL.
  • In essence, investors now own shares in two separate companies.

Is It Bad News for Investors?

Not necessarily.

In fact, it could be good news for long-term investors. Here’s why:

Focused Strategy:

  • The demerger allows both ABFRL and ABLBL to focus on their core business areas, leading to more efficient management and targeted growth.

Value Unlocking:

  • Independent valuation of each business can unlock shareholder value, especially in the fashion and retail sector, where brand differentiation matters.

Long-Term Growth:

  • ABFRL has retained its ethnic wear brands, Pantaloons retail chain, and other ventures.
  • ABLBL, with its strong brand portfolio, is now free to explore new market segments and partnerships.

Market Experts Weigh In

According to analysts, this price correction is purely technical and should not be seen as a loss. Most brokerage houses are optimistic about the long-term growth of both entities post-demerger.

“This is a typical market reaction post-demerger. The fundamentals haven’t changed. Investors now need to evaluate both companies on their individual merit,” said a Mumbai-based market analyst.


What Should Investors Do?

Here are a few tips:

  1. Don’t panic – This is not a market crash, it’s a valuation reset.
  2. Evaluate both stocks – Once ABLBL is listed, track its performance alongside ABFRL.
  3. Wait for clarity – Let both companies settle post-demerger before making major decisions.
  4. Consider long-term prospects – The demerger is aimed at long-term strategic value creation.

The 67% fall in ABFRL’s stock price may have caused concern among investors, but it’s not a reflection of poor performance or a failed strategy. Rather, it’s the result of a calculated move to demerge and restructure the business for greater efficiency and growth potential.

As always, investors are encouraged to look beyond short-term price movements and focus on the long-term fundamentals and business strategy.


Stay tuned for updates on when Aditya Birla Lifestyle Brands Ltd (ABLBL) officially lists and how both entities perform on the market.

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