Aditya Birla Capital on uptrend after subsidiary merger, 33% upside seen at revised TP of ₹240; Time to buy?
Aditya Birla Capital (ABC) is set to merge with its wholly-owned subsidiary arm Aditya Birla Finance Ltd (ABFL) on which shares of the financial services company picked an uptrend rising almost four per cent to hit an intra day high of ₹190.65 earlier today. Domestic brokerage firm JM Financials has reiterated its ‘buy’ rating on the Aditya Birla Group stock and sees a potential upside of 33 per cent at a revised target price of ₹240 in the 12 months from current levels.
The brokerage has raised its TP on the stock by 9.1 per cent compared to its earlier target of ₹220 saying that the subsidiary merger will be a positive for the holding company. The merger deal will help the unlisted subsidiary ABFL to skip the public-listing requirement ordered by the Reserve Bank of India (RBI).
Also Read:Aditya Birla Capital, subsidiary Aditya Birla Finance to merge JM Financials said in its report, ‘’We believe that the scheme would offer key positives which include: a) simplified operations, b) elimination of holding company discount since ABFL was mandated to be listed by September 2025 as per NBFC-UL guidelines, and c) aBSEnce of separate listing costs of ABFL. This also increases CRAR by ~150bps as such postpones the potential need to raise growth capital versus earlier scenario.'' ‘’We revise our target price upward to ₹240 (from earlier ₹220) resulting from removal of 15 per cent holding company discount which we had applied on ABFL entity on our previous target price.
Maintain BUY,'' said JM Financials. On Tuesday, shares of ABC opened at ₹184.60 and gained around four per cent to hit an intra day high of ₹190.65 against a 52-week high of ₹199.40 apiece on the BSE.
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