The brokerage has started coverage with a ‘Buy’ rating and a price target of ₹390 per share, implying a potential upside of about 21% from current levels.
Kotak said Aditya Birla Capital operates as a diversified financial conglomerate. Most of its value lies in its flagship diversified NBFC business, which has assets under management (AUM) of ₹1.5 lakh crore.
This is followed by a smaller but fast-growing housing finance business, with AUM of ₹42,200 crore. The brokerage expects the housing finance segment to clock a 51% CAGR between FY24 and FY26E.
The group’s non-lending businesses further supplement its overall portfolio.
According to Kotak, growth trends remain strong across lending segments, while performance in non-lending businesses has been mixed.
Profitability, although moderate at present, is gradually improving as the businesses scale up.
Aditya Birla Capital on March 10 invested ₹750 crore in the equity shares of its wholly-owned subsidiary Aditya Birla Housing Finance on a rights basis.
Following the transaction, the shareholding of Aditya Birla Capital in Aditya Birla Housing Finance remains unchanged at 100%, and the entity continues to be a wholly-owned subsidiary of the company.
All 13 analysts tracking Aditya Birla Capital currently have a ‘Buy’ rating on the stock. HDFC Securities has the lowest target price at ₹345, followed by Kotak at ₹390, while most other targets range between ₹400 and ₹450.
Shares of Aditya Birla Capital ended Wednesday’s session 3% lower at ₹322.50. The stock has declined 11% so far this year.
