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Business News/ Markets / Stock Markets/  Aditya Birla Capital share price can double in three years, says Macquarie; stock jumps 9% to hit 52-week high
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Aditya Birla Capital share price can double in three years, says Macquarie; stock jumps 9% to hit 52-week high

Macquarie has set Aditya Birla Capital share price target at ₹230 for the next 12 months, implying an upside potential of over 26%, and is its top pick among NBFCs. The brokerage also said that the stock has the potential to double in three years.

Aditya Birla Capital share price has jumped nearly 20% this year so far and the stock is up more than 29% in one year.Premium
Aditya Birla Capital share price has jumped nearly 20% this year so far and the stock is up more than 29% in one year.

Aditya Birla Capital share price jumped over 9% to hit a 52-week high of 199.55 apiece on the BSE on Tuesday after global brokerage firm Macquarie initiated coverage on the stock with an ‘Outperform’ rating.

Macquarie has set Aditya Birla Capital share price target at 230 for the next 12 months, implying an upside potential of over 26% from Monday’s closing price and is its top pick among NBFCs. The brokerage also said that the stock has the potential to double in three years.

Terming the company as the next big diversified NBFC story, Macquarie’s bullish view on Aditya Birla Capital shares comes on the back of the potential for robust loan/VNB growth and ROA/VNB margin expansion driven by access to cheaper funding, leveraging group ecosystem, strong SME growth, and improvement in protection mix.

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“We believe 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 in the next several years," Macquarie analyst Suresh Ganapathy said in a report.

According to Macquarie, Aditya Birla Capital has the moats of strong parentage, availability of a large group ecosystem for cross-selling, and a diversified product suite and distribution mix which is expected to facilitate robust loan/APE growth higher than peers or average of listed peers.

“In our view, the SME segment, in particular, is expected to show a strong >30% AUM CAGR over the next three years; and strong senior leadership providing confidence on underwriting and asset quality," the brokerage report said.

In its bull case scenario, Macquarie implies a valuation of 260 apiece for Aditya Birla Capital shares, assuming a 31% loan CAGR over FY23-26E for Aditya Birla Finance Ltd.

Also Read: Stocks to buy: BSE, Crompton Greaves - two stock picks by HDFC Securities with up to 40% upside potential

It expects Aditya Birla Finance Ltd (ABFL) to deliver an AUM CAGR of 28% over FY23-26E with >10 bps ROA expansion (2.4% in FY26E) which is higher than expectations for other top NBFCs. It believes ABFL can double its loan book by FY26E given strong credit demand in the SME and retail segments. 

Moreover, Aditya Birla Capital is expected to launch its D2C platform, ABCD in April 2024 to acquire new customers and provide holistic and simplified solutions. The broking firm expects strong retail and SME disbursement momentum from this platform, apart from general tailwinds to the SME loan segment.

Aditya Birla Capital share price has jumped nearly 20% this year so far and the stock is up more than 29% in one year.

At 2:15 pm, Aditya Birla Capital shares were trading 8.94% higher at 198.05 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 02 Apr 2024, 02:19 PM IST
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