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Investing.com - Investec has raised its price target on Aditya Birla Capital (ABCAP:IN) to INR370.00 from INR345.00 while maintaining a Buy rating, citing strong growth across business segments.
The company’s NBFC (Non-Banking Financial Company) division reported 6% quarter-over-quarter AUM (Assets Under Management) growth, with Personal/Consumer AUM growing at an even stronger rate of 11% QoQ. Gross Stage 3 assets decreased by approximately 60 basis points QoQ, supported by an ARC transaction in the unsecured business.
The Housing Finance Company (HFC) segment demonstrated robust performance with 11% QoQ growth, stable asset quality, and operating leverage leading to Return on Assets (RoA) expansion. The RoA/RoE improved to 1.8%/14% according to the research note.
In other divisions, Life Insurance Individual Annual Premium Equivalent grew 19% year-over-year for H1 with a 420 basis points YoY margin increase due to mix change, while the Asset Management Company saw AUM growth of 7% QoQ with stable core PBT yield year-over-year.
Investec has increased the NBFC multiple from 2x to 2.2x given its growth, diversified loan book, and asset quality, while also raising the Housing Finance multiple to 2.0x based on sharp RoE expansion with clear visibility of RoA/RoE of 2%/15%+.
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