ABCAPITAL – Story of a Stock

Aditya Birla Capital Ltd.

ABCAPITAL

Sector: Financial Services Sub-sector: Diversified Financial Services

Qtr Score Rank 8 / 57 (Top 88 percentile)Growth Score Rank: Not ranked

Quarterly Score

↔ Trend: Stable

Sentiment stable - Recent avg: 8.50, Historical avg: 8.45

Showing the latest 12 quarterly points (newest to oldest).

Score context (latest 12 quarters)

Q1FY25

8.2

No additional context available.

Q2FY25

8.5

No additional context available.

Q3 FY2025

8.1

Management expects to close FY25 with a Life Insurance VNB margin of 17-18%, implying significant expansion in Q4 FY25. NBFC credit cost is expected to remain within the normalized threshold of 1.5%.

Quarter summary

Strategic shift in NBFC portfolio towards secured business loans and HFC to navigate macroeconomic challenges and improve asset quality.
Significant investments in digital platforms and distribution across businesses (ABCD, Udyog Plus, Stellar) are yielding strong traction in customer acquisition and business volumes.

Rationale

Consolidated revenue grew by 10% YoY to INR 10,949 crore in Q3 FY25, demonstrating healthy top-line expansion despite a challenging macroeconomic environment.
The NBFC business exhibited strong AUM growth of 21% YoY and 4% sequentially to INR 1.19 trillion, coupled with a strategic de-risking shift, increasing the secured portfolio mix to 74% (from 69% YoY) and reducing exposure to smaller ticket unsecured personal loans. Asset quality improved significantly with gross Stage 2 & 3 loans declining by 60 bps YoY to 4.25% and credit cost at 1.36%, well within the 1.5% normalized threshold.

Q4 FY2025

9.0

NBFC expects a 25% AUM CAGR over the next three years with gradual RoA expansion. HFC targets an RoA of 2.0-2.2% in 8-10 quarters and continued market share gains. Life Insurance aims for 20-25% individual FYP CAGR over three years and VNB margin >18%. Health Insurance aims to achieve a combined ratio of 100% at the earliest.

Quarter summary

Successful amalgamation of Aditya Birla Finance with Aditya Birla Capital, streamlining the corporate structure for enhanced capital access and operational efficiency.
Strategic shift in the NBFC business towards a higher secured portfolio mix (74% from 72%) and calibrated sourcing in unsecured segments, leading to improved asset quality metrics.

Rationale

Consolidated revenue grew by 13% YoY in Q4 FY25 and 20% YoY for FY25, while consolidated PAT (excl. one-off) grew 6% YoY in Q4 FY25 and 8% YoY for FY25, indicating solid overall financial trajectory.
The NBFC portfolio grew 20% YoY to 1.26 trillion and profit after tax grew 11% YoY, with RoA improving 15 bps sequentially to 2.25%. Credit cost improved 22 bps YoY to 1.21% and Gross Stage 2 & 3 loans declined 71 bps YoY to 3.78%, reflecting robust asset quality and risk management.

Q1 FY2026

8.8

NBFC credit cost for FY26 is expected to remain in a similar range as Q1 FY26's 1.30%. HFC aims to achieve an RoA of 2% to 2.2% over the next eight quarters. Life Insurance maintains guidance to expand Net VNB margins to 18%+ for FY26, grow Individual FYP at a CAGR of 20%+ for the next 3 years, and double Net VNB in the same timeframe.

Quarter summary

The company emphasized its commitment to quality and profitable growth, leveraging data, digital, and technology, underpinned by prudent risk management.
Strategic expansion of the omnichannel distribution network, including D2C platform (ABCD) with 6.4 million customer acquisitions and B2B platform (Udyog Plus) scaling to INR 3,658 crore AUM.

Rationale

Consolidated PAT grew 10% YoY to INR 835 crore and total consolidated revenue grew 10% YoY to INR 11,333 crore, reflecting broad-based strength.
The HFC business exhibited exceptional growth with disbursements up 76% YoY and portfolio up 70% YoY to INR 34,605 crore, while also improving RoA by 15 bps sequentially to 1.59% and RoE by 132 bps to 12.27%.

Q2FY26

7.5

No additional context available.

Q3 FY2026Latest

9.2

Life Insurance targets a 20%+ CAGR in Individual FYP over the next 3 years, aiming to expand VNB margins to 18%+ and double Net VNB in absolute numbers. NBFC expects to maintain credit cost in the 1.2-1.3% range and improve retail/MSME mix. Health Insurance aims to grow ahead of the market while improving profitability. HFC capital infusion is expected to close by end of March 2026, subject to CCI approval.

Quarter summary

ABCL secured a significant capital infusion for its Housing Finance subsidiary from Advent International, bolstering its growth strategy.
The company demonstrated broad-based strong growth across all key segments (lending, asset management, and insurance) accompanied by improving profitability metrics.

Rationale

Consolidated PAT (ex-exceptional) grew 41% YoY and 15% QoQ to ₹983 crore, with total revenue up 30% YoY and 14% QoQ to ₹14,181 crore, indicating exceptional top and bottom-line growth.
Housing Finance (ABHFL) secured a ₹2,750 crore primary capital infusion from Advent International, valuing the entity at ₹19,250 crore post-money, which will significantly strengthen its balance sheet and support its 58% YoY AUM growth (to ₹42,204 crore) and 109% YoY PBT growth.

Future Growth Prospects

Growth outlook data not available yet for this company.

Story of the Stock - Top Strategies

Latest Fiscal Years: FY26, FY25, FY24Top strategies (ranks 1-3) per year

Curated from latest transcripts

Fiscal YearFY26

#1Impact: HIGH

Digital Transformation and Technology Investment

Leveraging digital platforms and AI/ML to drive efficiency, customer acquisition, and product innovation.

Ongoing, with specific initiatives like ABCD app and digital underwriting mentioned.

Aditya Birla Capital is heavily investing in digital platforms, AI/ML capabilities, and data analytics across all its businesses to enhance customer experience, streamline operations, and drive growth.

Evidence

"We continue to focus on driving quality and profitable growth by leveraging data, digital and technology."

"Our customer centric approach enables us to provide simple and holistic financial solutions in a seamless way."

"We have invested significant investments in AI and analytics in areas of sales training as well as customer experience."

"The Opex to AUM ratio improved from 2.26% last year to 1.92% in quarter 4, and this has largely been driven by operating leverage as we continue to sweat new branches opened in last 12-18 months."

#2Impact: HIGH

Focus on Retail and MSME Segments

Targeting growth in personal, consumer, and MSME loans, with a focus on improving yields and margins in these segments.

Growth in these segments is noted in Q2 FY26, with expectations of further improvement in Q3 and Q4.

The company is strategically increasing its focus on the personal, consumer, and MSME loan segments, which are expected to drive yield and margin improvements.

Evidence

"As our personal and consumer and unsecured business grows the way it has grown in quarter 2, we will see improvement in yield going forward."

"So, I think the NIMs are quite stable, Chintan. As I said, as we grow our personal and consumer, we will start seeing the benefit in quarter 3, quarter 4 with the growth which we have seen in quarter 2."

"The MSME segment comprises 56% of our overall AUM as of March'25."

"We aspire to be a top lender of choice for MSMEs. The AUM for business loans to MSMEs grew by 25% year-on-year, which is substantially higher than industry growth for the year."

#3Impact: HIGH

Product Diversification and Innovation

Launching new products and enhancing existing offerings across insurance and asset management to cater to evolving customer needs.

New product launches and enhancements are ongoing.

Aditya Birla Capital is actively innovating its product portfolio, particularly in life and health insurance, and asset management, to drive growth and expand market share.

Evidence

"In the life insurance business, we have calibrated the interest rate sensitive business as part of our strategy..."

"We maintain our guidance to expand our Net VNB margins through the year to achieve 18% plus for the year."

"Our Alternatives business is a key growth driver, with a high-calibre team and deep expertise."

"On the Passives front, we launched the ABSL BSE 500 Momentum 50 Index Fund and ABSL BSE 500 Quality 50 Index Fund to grow our Passive AuM."

Fiscal YearFY25

#1Impact: HIGH

Digital Ecosystem Enhancement

Accelerated growth through digital platforms and enhanced customer acquisition via ABCD app and Udyog Plus.

ABCD app live in April 2024; Udyog Plus has 2.2 million registrations.

Focus on scaling digital platforms like ABCD app and Udyog Plus for customer acquisition and engagement.

Evidence

ABCD app live in April 2024, offering a comprehensive portfolio of over 24 products and services.

Udyog Plus has more than 2.2 million registrations and contributes about 25% of disbursements in unsecured business loans.

Digital customer acquisition processes on the App and Udyog Plus are designed for end-to-end control.

#2Impact: HIGH

Portfolio Calibration and Quality Focus

Reduced exposure to unsecured personal loans and increased proportion of secured business loans, leading to improved asset quality.

Secured portfolio at entity level improved from 69% last year to 74% in Q3.

Strategic shift towards secured business loans to improve asset quality and risk-calibrated returns.

Impact: 74 %

Evidence

Reduced exposure to smaller ticket size unsecured personal loans and increasing the proportion of secured business loans.

Secured portfolio at an entity level has improved from 69% last year to 74% in Q3.

Gross stage 2 and 3 loans in NBFC business declined by about 60 bps year-on-year and remained flat sequentially at 4.25% as of December-end.

#3Impact: HIGH

Omnichannel Distribution Network Strengthening

Strengthening omnichannel distribution network with co-located branches and digital platforms to enhance customer reach and engagement.

1,482 branches across all businesses as of December-end.

Expanding the physical and digital distribution network to provide seamless customer interaction across channels.

Impact: 1482 branches

Evidence

Strengthen our omnichannel based distribution network.

We had 1,482 branches across all businesses as of December-end.

About 60% of our branches are co-located across more than One ABC 240 locations.

Fiscal YearFY24

#1Impact: HIGH

Leveraging Digital Platforms and Data Analytics

Digital First strategy for product innovation, direct acquisition, and seamless transacting experience, supported by data analytics for customer insights and personalized offerings.

Ongoing, with specific mentions of apps going live in the next month and continued investment.

Focus on digital platforms and data analytics to drive customer acquisition, improve experience, and enable personalized services. This approach underpins many of the company's growth and efficiency initiatives.

Evidence

"Digital First' is at the core of our strategy for product innovation, direct acquisition and seamless transacting experience."

Leveraging high end analytics tools, we make informed decisions that positively impact our customers' lives through personalized product offerings, targeted health and wellness interventions, and a personalized service approach resulting in a better customer experience.

The company is investing in technology and digital capabilities, with a focus on data augmentation and analytics enhancing cross-sell, retention, and fraud management.

#2Impact: HIGH

One ABC, One P&L Approach

Focus on quality and profitable growth by leveraging data, digital, and technology, with three pillars: One Customer, One Experience, and One Team.

Ongoing, mentioned as the approach for FY24 and beyond.

This integrated approach aims to build scale and improve performance across all businesses by fostering collaboration and a unified customer view.

Evidence

At Aditya Birla Capital, we follow “One ABC One P&L” approach, to focus on quality and profitable growth by leveraging data, digital and technology.

The three pillars of our approach are “One Customer”, “One Experience” and “One Team”. This approach has helped us to grow and build scale across businesses.

Going forward, we will continue with our One ABC, One P&L approach to grow and build scale in each of our key businesses.

#3Impact: HIGH

Udyog Plus - B2B Platform for MSMEs

Scaling up the B2B platform for MSMEs, Udyog Plus, to provide comprehensive digital solutions, aiming to double the NBFC portfolio in three years.

Launched earlier in the year, with continued scaling efforts.

Udyog Plus offers a paperless digital journey for MSMEs, integrating with government and private e-commerce platforms to provide credit facilities. The company aims to leverage this platform to scale up its business and achieve significant growth.

Impact: 2 x

Evidence

Our comprehensive B2B platform for MSMEs ecosystem, Udyog Plus has seen a very robust response with more than 4 lakh registrations as of December-end.

We will continue to scale up the business in ABG ecosystem as we expand our market footprint in B2B segment.