Aditya Birla Capital Q2 Results Review - Strong Performance Across Most Businesses: Motilal Oswal

Motilal Oswal Report

Aditya Birla Capital Ltd. has exhibited significant improvement in operational metrics across all other business segments in Q2 FY23. With the worst on asset quality behind, the coming years will see an uptick in its growth, lower credit costs, and better return ratios.

The asset management business is likely to churn out better profitability, driven by an improvement in revenue as well as cost rationalisation. Value of new business margin and persistency margin in the life insurance business continues to improve. The drag on consolidated profit after tax from other segments such as health insurance will fall, improving the overall profitability.

We expect Aditya Birla Capital's consolidated profit after tax to register a compound annual growth rate of 27% over FY22-24.

The thrust on cross-selling, investments in digital, and leveraging ‘One ABC’ will lead to healthy return ratios, even as we build in a consolidated FY24 return on equity of ~14%.

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