Buy Aditya Birla Capital; target of Rs 340: Motilal Oswal

Motilal Oswal's research report on Aditya Birla Capital

Aditya Birla Capital (ABCL) has steadily evolved into a digitally enabled, customer-focused financial services platform with a diversified presence spanning lending, insurance, and asset management. The company has sharpened its strategic focus on expanding its retail and MSME lending portfolio, enhancing productivity through proprietary digital platforms, such as the ABCD App and Udyog Plus, and strengthening its omni-channel presence to boost direct customer engagement. In recent quarters, the company has implemented several strategic initiatives, including tightening underwriting standards, deliberately reducing exposure to small-ticket loans, and recalibrating digital partnerships in its personal and consumer loans (P&C) segment. These measures have helped it maintain asset quality, which is significantly stronger than that of its peers.

Outlook

We expect a consolidated PAT (pre MI) CAGR of ~26% over FY25-27. The thrust on cross-selling, investments in digital platforms, and leveraging ‘One ABC’ will lead to healthy return ratios, even as we build in a consolidated RoE of ~14% by FY27. Reiterate BUY with an SoTP (Mar’27E)-based TP of INR340.