Motilal Oswal is bullish on Aditya Birla Capital has recommended buy rating on the stock with a target price of Rs 145 in its research report dated November 06, 2018.
Motilal Oswal's research report on Aditya Birla Capital
ABCAP’s PAT declined 13% YoY to INR2b in 2QFY19, largely driven by lower profit in Life Insurance business. Other segments, however, performed well in the quarter. NBFC: Loan book grew 8% QoQ (+24% YoY) to INR480b. ABCAP continues emphasizing on retail and SME lending, as evident from the increase in the share of these segments to 51% from 47% in 2QFY18. Within these segments, the ‘digital and unsecured’ lending product has witnessed the sharpest increase in loan book share (up from 1% of total loans in FY17 to 6.2% currently). ABCL has managed its liabilities well and does not expect to slow down on loan growth due to liquidity. Incremental CoF is up 20-25bp over the past two months.
However, we cut our FY19/20 consol. EPS estimates by 8-11% to factor in lower growth in the lending and asset management segments, coupled with profitability pressure in the NBFC segment. Maintain Buy with a target price of INR145 (Sep’20E SOTP-based).
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