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.
HFCs 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 businesses APE grew 33 per cent yoy for H1 with 680 bps yoy 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 yoy.
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.
