Aditya Birla Capital gains over 9% as Macquarie initiates coverage with ‘outperform’ call

Aditya Birla Capital is poised to show strong growth in loans and earnings, driven by its lending (NBFC and HFC) and savings (life insurance) businesses over the next several years, Macquarie said

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Shares of Aditya Birla Capital gained over 9 percent in morning trades on April 2, a day after brokerage Macquarie initiated coverage on the NBFC with an “outperform” call and a target price of Rs 230.

At 11.38 am, the stock was trading at Rs 198.35.

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According to the brokerage, Aditya Birla Capital (ABCL) is poised for show strong growth in loans and earnings driven by both its lending (NBFC and HFC) and savings (life insurance) businesses over the next several years.

ABCL has the advantage of strong parentage, availability of a large group ecosystem and diversified distribution mix to facilitate robust loan and APE growth higher than peers/average of listed peers.

“In our view, the SME segment, in particular, is expected to show a strong AUM growth over the next three years,” the report added.

Macquarie analysts estimate that ABCL offers over 30 percent upside and is their top NBFC pick.

Also read: What is the road ahead for Aditya Birla Capital after the merger with its subsidiary?

In the December quarter, the NBFC reported a consolidated revenue of Rs 9,997 crore, a 29 percent increase from the previous fiscal. Net profit grew 39 percent to Rs 736 crore.

Aditya Birla Capital Limited is the holding company for the financial services businesses of the Aditya Birla Group. On March 11, the Aditya Birla Capital board approved the amalgamation of Aditya Birla Finance Ltd, its wholly owned subsidiary, with itself to “create a large unified operating NBFC”.

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