Buy Aditya Birla Capital; target of Rs 380: ICICI Securities

ICICI Securities's research report on Aditya Birla Capital

Aditya Birla Capital Limited (ABCL) delivered robust performance on growth as well as asset quality fronts for its lending businesses which resulted in 2.2% RoA for NBFC business and 1.8% RoA for HFC business. We believe ABCL’s strong execution, especially on delivering better-than-industry growth alongside managing credit cost and operating efficiency gains in ensuing quarters, makes it well-placed to reach RoA of >2.2% in next two years in NBFC business and deliver AUM growth of >20%. HFC business is likely to grow rapidly at >30% CAGR over FY25-27E and reach its targeted RoA of >2% by FY27. Given the robust performance in lending businesses and healthy outlook,

Outlook

We revise our target multiple for lending business to 2.5x for FY27E vs. ~2x earlier, and hence, upgrade the stock to BUY (from Add) with SoTP-based revised TP of INR 380 (earlier: INR 300).