Buy Aditya Birla Capital For Traget Rs.220 - Motilal Oswal Financial Service Ltd
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Marching on despite a calibration in personal/consumer loans
* Aditya Birla Capital (ABFL)’s 3QFY24 consolidated revenue rose 29% YoY to ~INR100b, and consolidated PAT (post-minority) grew 39% YoY to ~INR7.4b.
* It added ~59 branches in 3QFY24, taking the total branch count to 1,463. The management has exhibited great agility in achieving its articulated operating metrics and leveraging the ABG ecosystem.
NBFC: NIMs stable QoQ; the share of SME, HNI, and Retail remains stable
* The NBFC loan book grew 35% YoY/5% QoQ to ~INR986b. Retail and SME segments’ AUM grew 39% YoY and comprises ~68% of the AUM mix. The 3QFY24 disbursements grew 26% YoY to ~INR166b.
* ABFL raised its lending rates by ~20-25bp across product and customer segments, aiding a sequentially stable NIM of ~6.9%. Management shared that it expects a minor rise in CoB in 4Q but can mitigate its impact through improvements in yields.
* Asset quality continued to improve, with GS2 and GS3 assets declining ~40bp to ~4.9%. The S3 PCR rose ~2pp QoQ to ~50%.
* The parent ABCL has infused ~INR8.5b in the NBFC business in 3QFY24 and ~INR16b since it last raised equity capital.
* ABFL continued to expand its geographical reach by adding 25 branches in 3QFY24 and now has 400 branches as of Dec’23.
* The company tightened the underwriting in the Personal and Consumer loans, consequent to which sequential growth in this segment declined to ~1%. Consumer loans (including BNPL) declined to ~INR27b at the end of Dec'23 from ~INR41b (in Sep'23).
Housing Finance: AUM growth healthy even as NIM moderates QoQ
* The company reported broad-based growth in 3QFY24 across customer segments, with 45% YoY growth in disbursements to ~INR20.2b. The loan book grew 27% YoY to INR165b as of Dec’23.
* NIM contracted ~20bp QoQ to ~5.4%. Management expects the competitive intensity to remain high in the last quarter but still targets delivering strong loan growth through market share gains from peers.
* GS2 and GS3 assets declined ~85bp QoQ to ~3.5%.
Asset Management: Domestic equity share rises
* The quarterly average AUM (QAAUM) rose 11% YoY to INR3.12t in 3QFY24. Individual monthly average AUM grew 14% YoY to INR1.66t in Dec'23.
* The domestic equity mix rose to ~44% (PQ: ~42%). SIP inflows grew 7% YoY to ~INR10.1b in Dec’23. Passive AUM stood at INR293b, up 36% YoY.
Life Insurance: VNB margin improves with healthy 13th month persistency
* Individual FYP for 3QFY24 grew 8% YoY to ~INR19.8b, while renewal premium grew 20% YoY to INR58.2b.
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