Target: ₹415
Current Market Price (CMP): ₹369.25
Aditya Birla Capital (standalone) reported a 19% year-on-year increase in its Q4 profit after tax (PAT), reaching ₹780 crore, aligning with market expectations. The rise in operational expenses, with the cost-to-income ratio at 35% versus the estimated 33%, was balanced by a reduction in credit costs, which stood at 1% compared to the anticipated 1.2%. The return on assets (RoA) saw an improvement of 6 basis points quarter-on-quarter, now at 2.3%.
The company experienced robust asset under management (AUM) growth of 27%, notably driven by personal loans, which grew 38%, and unsecured business loans, which surged by 47%. Credit costs declined by 19 basis points quarter-on-quarter to a five-year low of 1%, bolstered by a broad-based 20-basis point decrease in gross non-performing assets (GNPA). Management anticipates that credit costs will remain stable despite increased unsecured exposure, supported by a predominantly collateral-backed portfolio, comprising approximately 72% of the total book, and minimal impact from ongoing conflicts in West Asia.
Net interest margin (NIM) fell by 4 basis points quarter-on-quarter, attributed to competitive pressures and mark-to-market losses. However, recovery is expected as personal and unsecured loans, which account for about 23% of the portfolio, expand. A projected 2-3% shift in the loan mix is anticipated to raise margins by 25-30 basis points over the next few quarters, aiding in achieving a RoA target of 2.5% by the end of fiscal year 2027.
Aditya Birla Sun Life Insurance also reported strong performance, with a 14% increase in value of new business (VNB) and annual premium equivalent (APE) in Q4, exceeding forecasts. VNB margins improved by 20 basis points year-on-year. The company has set a target for VNB margins between 18-20% by fiscal year 2027, aiming for 20% APE growth over the next three years. The firm maintains an “Outperform” rating, identifying it as a top choice in the non-banking financial company (NBFC) sector.
Published on May 6, 2026
