Aditya Birla Capital Shares in Focus After Kotak Initiates Coverage With ‘Buy’ Rating
Shares of Aditya Birla Capital Ltd. are expected to remain in focus on Thursday, March 12, after brokerage firm Kotak Institutional Equities initiated coverage on the stock with a positive outlook.Kotak has begun coverage with a ‘Buy’ rating and assigned a price target of ₹390 per share, indicating a potential upside of around 21 percent from the current market levels.
Diversified Financial Services Model Drives Valuation
According to Kotak Institutional Equities, Aditya Birla Capital operates as a diversified financial conglomerate, with a significant portion of its value coming from its flagship diversified non-banking financial company (NBFC) business.The NBFC segment currently manages assets under management (AUM) of ₹1.5 lakh crore, making it the largest contributor to the group’s overall valuation.
Alongside this, the company’s housing finance business has been expanding steadily. The segment currently holds AUM of ₹42,200 crore and is expected to witness rapid growth in the coming years.
Housing Finance Segment Expected to Grow Rapidly
Kotak expects the housing finance business to record a compound annual growth rate (CAGR) of 51 percent between FY24 and FY26E, highlighting strong expansion potential within the segment.The brokerage noted that the company’s non-lending businesses also play a supporting role in strengthening its diversified financial services portfolio.
Lending Growth Strong, Profitability Gradually Improving
Kotak observed that growth trends remain robust across lending segments, indicating continued demand and expansion opportunities in the company’s core businesses.However, the brokerage added that performance across non-lending segments has been mixed.
Despite this, overall profitability is expected to improve gradually as the scale of operations increases across the company’s various financial services businesses.
Capital Infusion Into Housing Finance Subsidiary
Earlier this week, on March 10, Aditya Birla Capital invested ₹750 crore into the equity shares of its wholly owned subsidiary Aditya Birla Housing Finance through a rights issue.Following the transaction, the company’s shareholding in the subsidiary remains unchanged at 100 percent, and the entity continues to operate as a wholly owned subsidiary.
Analyst Sentiment Remains Strong
Market sentiment toward the stock remains positive. All 13 analysts currently tracking Aditya Birla Capital maintain a ‘Buy’ rating.Among the price targets, HDFC Securities has the lowest target at ₹345, followed by Kotak Institutional Equities at ₹390, while most other estimates range between ₹400 and ₹450 per share.
Stock Performance
Shares of Aditya Birla Capital Ltd. ended Wednesday’s session at ₹322.50, down 3 percent for the day.The stock has declined about 11 percent so far this year, even as analysts remain optimistic about the company’s long term growth prospects.
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