Target: ₹415
CMP: ₹369.25
Aditya Birla Capital (standalone)’s Q4 PAT rose 19 per cent y-o-y to ₹780 crore, in line with estimates. Higher-than-expected opex (cost-to-income at 35 per cent vs 33 per cent MQe) was offset by lower credit costs (1 per cent vs 1.2 per cent expected). RoA improved 6 bps q-o-q to 2.3 per cent.
AUM growth was healthy at 27 per cent, driven by personal loans (+38 per cent) and unsecured business loans (+47 per cent). Credit cost fell 19 bps q-o-q to a five-year low of 1 per cent, supported by a broad-based 20-bps q-o-q decline in GNPA. The management expects credit costs to remain range-bound despite higher unsecured exposure, aided by a largely collateral-backed portfolio (about 72 per cent of the book) and limited impact from the West Asia conflict to date.
NIM fell 4 bps quarter on quarter due to competitive pressure and MTM losses, but should recover as personal and unsecured loans (about 23 per cent of the book) scale-up and a 2-3 per cent rise in mix should drive a 25-30 bps margin uplift over the next few quarters, supporting a RoA target of 2.5 per cent by FY27-end.
Aditya Birla Sun Life Insurance reported Q4 VNB and APE growth of 14 per cent, both above expectations. VNB margins improved 20 bps y-o-y, . The management targets VNB margins of 18-20 per cent in FY27 and APE growth of 20 per cent over the next three years. Maintain Outperform: Our top pick in the NBFC space.