Aditya Birla Capital share price jumps 11% a day after Q3 result; Motilal Oswal, Emkay see a 32% upside
Aditya Birla Capital share price surged 11 per cent, a day after reporting Q3FY24 results, with consolidated revenue rising 29 per cent YoY and profit after tax jumping 39 per cent YoY.
Aditya Birla Capital share price surged as much as 11 per cent in intraday trade on BSE on Friday, February 2, a day after the company reported its December quarter scorecard. Aditya Birla Capital share price opened at ₹169 against the previous close of ₹167 and jumped 11 per cent to the intraday high of ₹185.35. Around 12:45 pm, the stock was 8.80 per cent up at ₹181.70 on the BSE.
Aditya Birla Capital on Thursday reported a 29 per cent year-on-year (YoY) rise in Q3FY24 consolidated revenue at ₹9,997 crore from ₹7,743 crore in the same quarter last year.
Profit after tax (PAT) for the quarter jumped 39 per cent YoY to ₹736 crore in the quarter under review against ₹530 crore in the corresponding quarter last year.
The company said its total AUM (assets under management), including AMC, life insurance and health insurance, grew by 13 per cent year-on-year to ₹4,10,444 crore.
"The strong momentum across businesses led to a 34 per cent year-on-year and 6 per cent sequential growth in the overall lending portfolio (NBFC and HFC) to ₹1,15,139 crore as on December 31, 2023," Aditya Birla Capital said.
The stock ended 2.31 per cent lower in the previous session after the company's Q3 results.
Motilal Oswal, Emkay see a 32% upside
Analysts and brokerage firms have faith in the growth prospects of the stock.
Following Q3 earnings, Motilal Oswal Financial Services reiterated a buy call on the stock with a target price of ₹220, implying a 32 per cent upside potential.
The brokerage firm pointed out that Aditya Birla Capital has exhibited a significant improvement in operational metrics across all business segments in nine months of the current financial year (9MFY24).
But for some jitteriness around digital/fintechsourced consumer and personal loans, FY25 will see an uptick in growth, lower credit costs, and better return ratios, said Motilal Oswal.
"The asset management business is likely to churn out better profitability, driven by an improvement in revenue as well as cost rationalization. VNB margin and persistency margin in the life insurance business continue to improve. The drag on consolidated PAT from other segments, such as Health Insurance, will decline thereby improving the overall profitability," Motilal Oswal said.
"We expect a consolidated PAT CAGR of nearly 39 per cent over FY23-26. The thrust on cross-selling, investments in digital, and leveraging ‘One ABC’ will lead to healthy return ratios, even as we build in a consolidated RoE (return on equity) of nearly 15 per cent in FY26," said the brokerage firm.
Emkay Global Financial Services also has maintained a buy call on the stock with a target price of ₹220, highlighting good performance across business segments.
"Aditya Birla Capital posted a good performance in Q3FY24 across its key business segments, with the lending businesses maintaining momentum in the company’s profitable growth journey, the AMC business delivering improved performance amid a favourable environment, and insurance businesses continuing to scale up with diversifying product offerings and distribution," said Emkay.
The brokerage firm underscored that while the company has already cut its BNPL book and plans to take BNPL to near zero and continues to reduce its exposure to the smaller ticket-sized personal loan segments, it aims to focus on the secured portfolio while growing the business loan segment as well. Management has reaffirmed its guidance of doubling the lending book over the next three years.
"To bake in Q3 developments, we have tweaked our FY24-26 estimates resulting in a 2-4 per cent increase in our PAT estimates. We reiterate our 'buy' rating on the stock with a revised Dec-24E target price of ₹220, as the operational momentum across the operating businesses remains strong and valuations remain relatively attractive," said Emkay.
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