Emkay Global Sees A Potential Upside Of Upto 29.4 % From Aditya Birla Group Stock

Emkay Global, a leading stock broking firm sees a potential upside of upto 29.4% from Aditya Birla Capital Ltd. The brokerage believes that the price would surge and hence has shared a price target of Rs 200 per share of the stock of the Aditya Birla Group.

Aditya Birla Capital Limited was formerly was known as Aditya Birla Financial Services Limited and is in the league of Fortune 500. It is an umbrella brand for all the financial services business of the conglomerate Aditya Birla Group, which was incorporated on 15th October 2007. Today, over 50% of Group revenues flow from overseas operations that span 36 countries in North and South America, Africa and Asia. The current market capitalisation of the firm stands at Rs 37,758.17.

Over the years the company has been a mixed bag, where one notable upshot has been that it has come out largely unscathed from a series of outlier external events. It has been backed by parentage, which powers the with one of the most competitive funding costs (FY19-22 average cost of funding: 7.5%) and top-of-the-league brand-reach across the length & breadth of the country.

But at the same time the company was lacking focus, with no right product value-proposition for customers and apt distribution model. Things changed a lot for the company because of multiple factors: change in management, much of the experimentation, in terms of distribution and product offerings has started reflecting and it has started focusing on leveraging technology through digital approach complemented by omni channel (Phygital) distribution approach.

Emkay Global believes that its diversified offering and competitive positioning of companies in their respective domain, can benefit Aditya Birla Capital Limited as a core holding in the India portfolio. "With a measurable presence across lending (NBFC and HFC), investing (AMC and Broking) and protection (Life Insurance, Health Insurance and Insurance Broking), The company is currently trading on FY24E P/B of ~1.6x, at ~13% RoE. We value it using SOTP-based valuation (FY24E NBFC: P/B of 2.2x; HFC: P/B of 2x; AMC: MCap of Rs 109 billion; Life Insurance: P/EV of 1.5x; Health Insurance: Rs 86 billion based on the ADIA deal valuation, and others at Rs 15 billion). We apply 20% holding-company discount on listed and not fully owned entities. Based on SoTP valuation, we peg our Mar-24E target price at Rs 200 per share, implying upto 29% upside."

The current market price of stock of Aditya Birla Capital Limited is closed at Rs 156.20, it was up by 1.75 points (1.13%) over previous day. In over a year the equity share price rallied by 56.04%, and over three years it rose by 110.65%.

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The stocks have been picked from the brokerage report of Emkay Global. Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.