Target: ₹265

CMP: ₹199.05

Aditya Birla Capital’s AUM grew 6 per cent q-o-q despite Personal/Consumer AUM declining 2 per cent q-o-q. Overall asset quality (AQ) was stable with GS3 improving about 4 bps q-o-q while unsecured saw an increase of about 10 bps. RoA and RoE declined marginally to 2.3 per cent and 15.6 per cent due to 28bps q-o-q NIM decline.

HFC saw strong 14 per cent q-o-q growth with improving AQ. RoE improved about 50 bps q-o-q to 11.5 per cent due to increase in NIM. Life insurance busines APE grew 33 per cent y-o-y for H1 with 680 bps y-o-y margin compression due to mix and interest rate change. In AMC, AUM grew 9 per cent q-o-q and core PBT yield improved about 6bps y-o-y.

ABCL is well positioned to deliver stable earnings growth over the next three years (about 14 per cent tangible RoE and 18 per cent+ operating PAT CAGR over FY24-27). NBFC is key for sustaining profitability. AQ was a positive surprise in Q2 given the deterioration witnessed in other NBFCs.

In last 2-3 years, the Company has been losing market share in active equity (down to 5 per cent in Q2FY25 vs 8.5 per cent in Q2-FY21). Its market share loss has reduced in last two quarters, and it remains a key monitorable.

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