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Motilal Oswal Report
Aditya Birla Capital Ltd. has exhibited a significant improvement in operational metrics across all business segments in FY24. FY25 will see an uptick in growth, lower credit costs, and better return ratios.
The asset management business is likely to churn out better profitability, driven by an improvement in revenue as well as cost rationalisation. Value of new business 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, improving overall profitability.
We expect a consolidated profit after tax compound annual growth rate of ~16% over FY24-26E. 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 return on equity of ~14% in FY26.
We reiterate our Buy rating on the stock with our revised SoTP (March-26E)- based target price of Rs 260.
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