Buy Aditya Birla Capital; target of Rs 270: ICICI Securities
ICICI Securities research report on Aditya Birla Capital
In Jul'22, as Ms. Vishakha Mulye took charge as MD & CEO, AB Capital Limited (ABCL) reimagined its business model. ABCL has been focusing on building frictionless tech-enabled loan processes and leveraging its group-level ecosystem. In-line with this, during the past 18 months, the company has invested in upgrading its digital platform and expanding its distribution network. ABCL's ABCD app went live in Apr'24 (~0.1mn registration) and would be one of the key engines driving new customer acquisition and retention. Cost-assets have peaked out at ~2.2% in FY24 and will likely moderate over the next two years for ABFL. It expects AUM growth at >25% over FY24–26E with share of unsecured portfolio steady at current levels of 27%. ABFL RoA may expand 25–30bps to 2.7-2.8% by FY26E from its current level of 2.4% driven by NIM expansion, operating leverage and steady credit cost at 1.5%.
