Aditya Birla Capital

The Indian financial services sector is experiencing a significant rally, driven by robust growth, favourable regulations, and RBI rate cuts. This positive environment has particularly benefitted diversified conglomerates like Aditya Birla Capital (ABCL). ABCL recently reported strong Q4 FY25 results, with consolidated revenue up 13 per cent year-on-year. A strategic ₹40 crore investment in its digital subsidiary further underscores its growth ambitions, contributing to its share price surge of 51 per cent recently 

The Indian financial services landscape has witnessed a remarkable interest from investors in recent months, with insurance and NBFC stocks rallying sharply on the back of robust sectoral growth, favourable regulatory signals, and improving macroeconomic conditions. The optimism has been further fuelled by the Reserve Bank of India's recent rate cuts, which have lowered borrowing costs and can increase credit demand across retail and corporate segments. This environment has particularly benefitted diversified financial conglomerates with exposure to lending, insurance, and asset management.

Within the financial sector, Aditya Birla Capital Limited (ABCL) has captured significant attention. The company recently reported a 13 per cent year-on-year rise in consolidated revenue for Q4 FY25 and a 20 per cent increase for the full year, with operating profit and profit after tax also registering healthy gains. A key development that has further energized investor sentiment was ABCL’s strategic investment of ₹40 crore in its wholly-owned subsidiary, Aditya Birla Capital Digital Limited (ABCDL), aimed at scaling up its digital financial services platform. This move, completed in March 2025, reflects ABCL’s commitment to digital transformation and its ambition to expand its reach in the rapidly evolving financial services landscape. Notably, Aditya Birla Capital’s share price surged by 51 per cent in the recent past months.

In light of these developments—ranging from sector-wide tailwinds and regulatory reforms to strong financial performance and strategic digital investments—an in-depth analysis of ABCL offers timely insights into how leading financial conglomerates are navigating and shaping India’s dynamic financial sector. Can ABCL’s share continue the current rally?

About the company
ABCL is the financial services platform of the Aditya Birla Group, a diversified Indian conglomerate. ABCL operates as a universal financial solutions provider, offering a wide range of products and services to a large customer base comprising individuals, HNI/UHNIs, small and medium-sized enterprises (SMEs), and large corporations across India. The company aims to be a one-stop solution for various financial needs, leveraging its strong brand reputation and extensive distribution network.

Business Model and Key Segments

ABCL operates through several key segments, each focusing on specific financial services:
■ NBFC (Aditya Birla Finance Limited - ABFL): Provides a comprehensive suite of lending solutions, including corporate finance, project finance, structured finance, supply chain finance, commercial vehicle loans, construction equipment loans, and home loans. It caters to a wide spectrum of customers from large corporates to retail individuals.

■ Housing Finance (Aditya Birla Housing Finance Limited - ABHFL): Focuses on home loans, loan against property, and other mortgage-backed financing solutions for affordable and mid-income housing segments.

■ Asset Management (Aditya Birla Sun Life Asset Management Company Limited - ABSL AMC): One of the largest asset managers in India, offering a wide range of mutual fund products (equity, debt, hybrid), portfolio management services (PMS), and alternative investment funds (AIFs) to retail and institutional investors.

■ Life Insurance (Aditya Birla Sun Life Insurance Company Limited - ABSLI): Provides a diverse portfolio of life insurance and wealth management products, including traditional plans, ULIPs, health insurance, and retirement solutions, catering to various customer needs for protection, savings, and investment

■ Health Insurance (Aditya Birla Health Insurance Company Limited - ABHI): A joint venture with MMI Holdings of South Africa, offering comprehensive health insurance solutions to individuals and groups, focusing on wellness and preventive healthcare.

■ Wealth Management & Broking (Aditya Birla Money Limited): Offers a range of services including equity and derivatives broking, wealth advisory, portfolio management services, and distribution of financial products like mutual funds and insurance.

■ General Insurance Broking: Provides general insurance solutions and advisory services to corporate and retail customers.

Profitability Breakdown
ABCL saw its profits rising by 12 per cent year-on-year to ₹3,360 crore in FY25. The housing finance company (HFC) arm contributed ₹419 crore, up 11 per cent year-on-year. Asset management, a key driver of fee income based on assets under management (AUM), saw a remarkable 23 per cent jump in profitability to ₹1,245 crore. Lending and asset management segments are large contributors to the company’s profitability. Life insurance, which significantly contributes to gross written premium and investment income, reported a profit of ₹158 crore, though this was a 20 per cent decline year-on-year. Health insurance, a rapidly growing segment, swung from a loss of ₹182 crore in FY24 to a profit of ₹6 crore in FY25, highlighting operational improvements. Other businesses, including wealth management and broking, contributed ₹287 crore (includes a gain of ₹191 crore from the sale of shares in subsidiaries), up from ₹226 crore last year.

Overall, ABCL’s broad-based growth across lending, insurance, and asset management, coupled with improving profitability in health insurance and other segments, positions the company strongly for continued value creation in India’s dynamic financial services landscape.

Business Updates
ABCL has recently undertaken significant strategic initiatives to streamline its corporate structure and bolster its digital capabilities. A major development is the completion of the amalgamation of Aditya Birla Finance with Aditya Birla Capital, effective April 1, 2025, with an appointed date of April 1, 2024. This merger simplifies ABCL's operations into two core segments: NBFC lending and investment holding for subsidiaries. Crucially, this amalgamation has enhanced capital efficiency, releasing approximately ₹3,000 to ₹3,500 crore, which is expected to cover 1 to 1.5 years of growth requirements. As both entities held AAA ratings, the merger does not impact the cost of funds but improves capital access and operational synergies.

In parallel, ABCL has reinforced its commitment to digital transformation by making a strategic investment of ₹40 crore in its wholly-owned subsidiary, Aditya Birla Capital Digital Limited (ABCDL). This investment, completed on March 25, 2025, on a rights basis, aims to support ABCDL's growth and funding needs within the financial services industry. This move underscores ABCL's broader strategy to enhance its digital footprint and leverage platforms to offer a comprehensive suite of financial products, solidifying its position in the evolving financial landscape.

Sector overview of the Indian financial sector
India’s financial sector is experiencing robust, broad-based growth, underpinned by strong fundamentals and digital transformation. Bank credit is projected to grow by 11.6–12.5 per cent year-on-year, reaching ₹19–20.5 trillion in 2025, while aggregate deposits maintain double-digit growth at 11.1 per cent. The sector’s asset quality has improved significantly, with gross NPAs at a 12-year low of 2.6 per cent and capital adequacy ratios at record highs, reflecting prudent risk management and profitability.

Insurance—both life and general—continues to expand rapidly, driven by rising financial awareness, regulatory reforms, and digital adoption. The asset management industry is thriving, fuelled by increasing retail participation and the shift towards systematic investment plans (SIPs), with fee income and AUM hitting new highs. General insurance broking and stock broking are also witnessing strong momentum, supported by a surge in retail investors and the proliferation of digital trading platforms. Wealth management is increasingly personalized, leveraging technology and data analytics.

The market size of the global financial services sector is expected to grow from $35.85 trillion in 2025 to $47.34 trillion by 2029, at a CAGR of 7.2 per cent. In India, the financial sector’s outlook remains positive, with resilient earnings, robust capital buffers, and continued digital innovation positioning it for sustained expansion and deeper financial inclusion. The sector’s evolution is marked by fintech-bank partnerships, regulatory clarity, and a focus on customer-centric solutions, ensuring continued growth across lending, insurance, asset management, and broking segments.

ABCL's Competitive Landscape and Positioning
ABCL navigates a highly competitive and fragmented Indian financial services market, facing a diverse set of competitors across its varied portfolio. In lending, ABCL competes with large private banks like HDFC Bank and ICICI Bank, as well as prominent NBFCs such as Bajaj Finance and specialised HFCs. Its Asset Management arm contends with industry leaders including SBI Mutual Fund and HDFC Mutual Fund, alongside emerging fintech players. In Life Insurance, ABCL's subsidiary faces off against major private insurers like HDFC Life and SBI Life, plus public sector giant LIC. The Health Insurance segment sees competition from standalone players like Star Health and general insurers with health portfolios. Lastly, in Wealth Management & Broking, ABCL competes with full-service and discount brokers, as well as private banking wealth managers.

Financially, large private banks typically surpass ABCL in scale and often boast superior profitability (ROE/ROA) and asset quality due to their lower cost of funds and extensive networks. Within NBFCs, Bajaj Finance is notable for its aggressive growth. ABCL's AMC and Insurance subsidiaries consistently rank among the top 5-10 in their respective segments, indicating strong competitive standing. While working to improve its cost-to-income ratio through digital transformation, ABCL aims for competitive profitability and has shown consistent improvement in asset quality within its lending business.

ABCL's Future Growth Guidance: A Realistic Outlook
ABCL's management consistently projects a positive growth trajectory, offering qualitative guidance across its diverse segments. This typically includes double-digit loan book growth for its lending businesses, robust Gross Written Premium (GWP) growth in insurance, and sustained Assets Under Management (AUM) growth (25 per cent growth) for asset management, buoyed by market performance and systematic investment plans (SIPs). While precise long-term numerical targets are less frequent, the company often provides directional goals such as maintaining healthy Return on Equity (ROE) and Return on Assets (ROA) levels, improving cost-toincome ratios, and upholding strong asset quality.

ABCL's diversified business model, strong brand recognition, and the inherent growth drivers of the Indian financial services sector—including under-penetration, increasing financialisation of savings, and robust credit demand—all lend credence to these projections. The company's proven track record of executing strategic initiatives, coupled with significant market tailwinds in health insurance, mutual funds, and retail credit, further supports this optimistic outlook. The emphasis on digital scalability also positions ABCL well for sustained expansion. Potential challenges, such as severe economic downturns, significant regulatory shifts, intense competition, or unexpected asset quality deterioration, are acknowledged by management, who typically outline mitigation strategies.

Outlook and Valuation
ABCL enters FY26 with a robust and positive outlook, underpinned by strong operational momentum, prudent risk management, and strategic capital allocation. The recently completed amalgamation of Aditya Birla Finance with ABCL has released approximately ₹3,000–3,500 crore in capital, providing ample fuel for growth over the next 12–18 months and simplifying the corporate structure into two focused segments: NBFC lending and investment holding. This structural shift is already yielding benefits, with consolidated revenue rising 20 per cent year-on-year to ₹47,369 crore and profit after tax growing 8 per cent to ₹3,142 crore in FY25. The NBFC business remains a key growth engine, with the loan book expanding 20 per cent year-on-year to ₹1.26 lakh crore and asset quality improving—gross Stage 2 and 3 assets declined to 3.78 per cent and credit costs were contained at 1.31 per cent.

The focus on MSME lending, which now constitutes 56 per cent of the NBFC AUM, and a calibrated approach to personal and consumer loans, positions ABCL for sustainable, risk-adjusted growth. The housing finance arm delivered exceptional performance, with AUM surging 69 per cent year-on-year and asset quality at best-inclass levels (gross Stage 3 at 0.66 per cent), while profitability and operating leverage are expected to improve further as the business scales.

In asset management, average AUM grew 15 per cent to ₹3.82 lakh crore, supported by strong SIP inflows and product innovation, while the life and health insurance businesses posted premium growth of 34 per cent and 33 per cent, respectively, with health insurance achieving profitability for the first time. Digital platforms such as the ABCD app and Udyog Plus are scaling rapidly, now driving a significant share of new business and enhancing customer acquisition and engagement. Management’s guidance of a 25 per cent CAGR in the loan book over the next three years, with an ambition to double the book and expand return on equity to 14 per cent by FY27, is anchored in cross-selling, digital investments, and operating synergies from the unified ‘One ABC’ platform. While macro and regulatory headwinds remain, ABCL’s diversified business mix, strong capital buffers, and proactive risk management provide resilience. The company’s strategic focus on digital, granular retail and MSME growth, and operational efficiency positions it as a leading, future-ready financial services conglomerate poised for sustained value creation.

As of July 4, 2025, ABCL is valued at approximately ₹71,834 crore. The company is currently trading at a P/B (Price to book value) of 2.36x, which is high when compared with its 3-year Median P/B of 2.0x. Moreover, its industry P/B is 0.96x. The PEG ratio of the company is 0.71, which is attractive. Given the recent past months' rally of over 50 per cent surge in stock price, most of the future growth and optimism seems already priced in. Hence, we suggest to ‘HOLD’ the stock. Any purchase at this point of time should be only for long-term holding i.e., 3-5 years. As Warren Buffett wisely said, ‘The stock market is a device for transferring money from the impatient to the patient.’ For ABCL, patience an.d a long-term view remain the keys to unlocking future value.