Aditya Birla Capital share price can double in three years, says Macquarie; stock jumps 9% to hit 52-week high
₹199.55 apiece on the BSE on Tuesday after global brokerage firm Macquarie initiated coverage on the stock with an ‘Outperform’ rating. Macquarie has set Aditya Birla Capital share price target at ₹230 for the next 12 months, implying an upside potential of over 26% from Monday’s closing price and is its top pick among NBFCs.
The brokerage also said that the stock has the potential to double in three years. Terming the company as the next big diversified NBFC story, Macquarie’s bullish view on Aditya Birla Capital shares comes on the back of the potential for robust loan/VNB growth and ROA/VNB margin expansion driven by access to cheaper funding, leveraging group ecosystem, strong SME growth, and improvement in protection mix.
Also Read: Aditya Birla Fashion upper circuit: Aditya Birla Fashion shares jump 15% on proposed demerger of Madura Fashion “We believe Aditya Birla Capital is poised to show strong growth in loans and earnings driven by its lending (NBFC and HFC) and savings (life insurance) businesses in the next several years," Macquarie analyst Suresh Ganapathy said in a report. According to Macquarie, Aditya Birla Capital has the moats of strong parentage, availability of a large group ecosystem for cross-selling, and a diversified product suite and distribution mix which is expected to facilitate robust loan/APE growth higher than peers or average of listed peers.
“In our view, the SME segment, in particular, is expected to show a strong >30% AUM CAGR over the next three years; and strong senior leadership providing confidence on underwriting and asset quality," the brokerage report said. In its bull case scenario, Macquarie implies a valuation of ₹260 apiece for Aditya Birla Capital shares, assuming a 31%
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