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    Aditya Birla Cap

    ABCAPITAL
    Financial Services·4 Aug 2025
    Management Summary

    Aditya Birla Capital delivered a strong Q1 FY26, with consolidated PAT and revenue growing 10% YoY, driven by robust growth in its NBFC, HFC, AMC, and insurance businesses. Asset quality remained stable, and operating leverage began to kick in for HFC. The company continues to focus on digital adoption and omnichannel distribution, while maintaining a cautious stance on the smaller ticket unsecured MSME segment.

    Highlights

    5
    • Consolidated PAT grew 10% YoY to 835 crore Rupees, driven by strong performance across segments.

    • NBFC portfolio grew 22% YoY to 1.31 trillion Rupees, with personal and consumer loan disbursements up 65% YoY.

    • HFC disbursements surged 76% YoY to 5,404 crore Rupees, leading to a 70% YoY portfolio growth and improved RoA of 1.59%.

    • AMC average AUM crossed 4 trillion Rupees, growing 14% YoY, with PAT up 18% YoY to 277 crore Rupees.

    • Life Insurance individual FYP grew 23% YoY, significantly above industry average, and Health Insurance GWP grew 30% YoY.

    Concerns

    2
    • Uncertainties persist in the smaller ticket size unsecured MSME segment, leading to a cautious approach and tightened underwriting norms.

    • Management declined to disclose specific write-off figures for NBFC and HFC segments when asked by an analyst.

    What Changed1

    vs Q2 FY26

    Guidance items10 → 7 (-3)

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated PAT₹835 Cr+10%YoY
    2. 02Consolidated Revenue₹11,333 Cr+10%YoY
    3. 03Standalone PAT₹676 Cr+3%YoY
    4. 04Standalone Tier 1 Ratio15.6%
    5. 05Standalone CRAR18.1%

    Segment breakdown

    NBFC Segment
    ₹15,851 Cr Disbursements₹13.1L Cr Portfolio AUM₹689 Cr PAT2.3% RoA3.7% Gross Stage 2 & 3 loans41.2% Provision Coverage (Stage 3)130% Credit Cost6.0% NIM (including fee income)1.7% Opex to AUM ratio
    HFC Segment
    ₹5,404 Cr Disbursements₹34,605 Cr Portfolio AUM₹154 Cr PBT1.6% RoA12.3% RoE2.6% Opex-to-assets62% Stage 3 loans30% Net Stage 3 ratio7.7% Cost of borrowing
    Asset Management Business
    ₹4.0L Cr Average AUM11% Equity AUM Growth₹277 Cr PAT₹4.4L Cr Overall Average AUM (incl. alternate assets)₹447 Cr Revenue from Operations₹254 Cr Operating Profit₹372 Cr Profit Before Tax
    Life Insurance Business
    23% Individual First Year Premium Growth5.1% Market Share7.5% Net VNB Margin₹66 Cr Net VNB₹3,594 Cr Total Premium₹1.0L Cr AUM192% Solvency
    Health Insurance Business
    ₹1,461 Cr Gross Written Premium (excl. multi-year guidelines)₹1,357 Cr Gross Written Premium (incl. multi-year guidelines)14.5% Market Share (among SAHIs)111% Combined Ratio₹36 Cr Net Loss (new accounting norms)₹24 Cr Net Loss (old accounting norms)
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    ABCL is sufficiently funded for growth requirements for the next 9 to 12 months. HFC subsidiary received an equity capital infusion of 250 crore Rupees. Life insurance business raised 200 crores via listed subordinate debt.

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    NBFC Credit Cost
    1.30%
    Medium
    Profitability
    HFC RoA
    2 to 2.2%
    High
    Profitability
    Health Insurance Combined Ratio (COR)
    100%
    High
    Profitability
    Life Insurance Net VNB Margins
    18% plus
    High
    Profitability
    Life Insurance Net VNB
    double the value
    High
    Volume
    Life Insurance Individual FYP Growth
    20%+
    High
    Capital
    Capital Sufficiency
    sufficiently funded
    High

    NBFC NIM Trajectory

    Next few quarters
    Current5.97%
    TargetImprovement from current levels

    Why it matters

    Management expects NIM to improve due to product mix shift; verification of this trend is key for profitability.

    So, in the next few quarters, you will see margins improving from here on.

    How to verify

    key_financials.segment_breakdown[name='NBFC Segment'].metrics[label='NIM (including fee income)']

    Risks & concerns

    3
    RiskSeverity

    Uncertainties in smaller ticket size unsecured MSME segment

    Management continues with a cautious approach and tightened underwriting norms in this segment due to ongoing uncertainties.Management acknowledged

    medium

    Global macro-economic environment uncertainty

    Global macro-economic environment remains uncertain due to tariff negotiations and geo-political tensions, though India presents strength.Management acknowledged

    low

    Consumer leverage in personal and consumer loans

    Management recognizes that consumer leverage at a client level is still high and has proactively tightened underwriting norms and tracking.Analyst acknowledged

    medium

    Q&A highlights

    7

    “The small ticket unsecured loan, we call it STUL, that is around 1.3% of our overall loan book. We had started taking actions from two, three quarters prior, and we have tightened our underwriting, collections, score cards... if you look at the Stage 3 portfolio in unsecured business, close to 53% of the Stage 3 is guaranteed by the CGTSME or the government guarantees... 75% of the principal gets covered by the guarantee. It takes between 12 to 18 months in terms of getting the refund and all at times.”

    Clarifies the specific segment of concern (small ticket unsecured loans, 1.3% of book), management's proactive measures, and the coverage/timeline of government guarantees for Stage 3 loans.

    asked by Chintan Shah

    3 min read6 chapters

    Detailed Narrative

    01

    Strong Consolidated Performance and Growth Momentum

    Aditya Birla Capital reported a robust Q1 FY26, with consolidated profit after tax growing 10% year-on-year to 835 crore Rupees and total consolidated revenue increasing 10% year-on-year to 11,333 crore Rupees. This growth was underpinned by strong performances across its key business segments, demonstrating the company's ability to drive quality and profitable expansion despite global uncertainties. The company emphasized its focus on leveraging data, digital, and technology to enhance customer-centric financial solutions and strengthen its omnichannel distribution network.

    02

    NBFC Business Drives Portfolio Expansion with Calibrated Growth

    The NBFC segment showed significant growth, with disbursements increasing 18% year-on-year to 15,851 crore Rupees in Q1 FY26. The overall NBFC portfolio grew 22% year-on-year and 4% sequentially, reaching 1.31 trillion Rupees. Profit after tax for the NBFC segment grew 11% year-on-year and 6% sequentially to 689 crore Rupees, with a healthy RoA of 2.25%. Management noted proactive interventions in unsecured loan segments, leading to a 28% sequential and 65% year-on-year growth in personal and consumer loan disbursements to 3,947 crore Rupees, while maintaining caution in smaller ticket unsecured MSME loans.

    03

    Housing Finance Business Achieves High Growth and Improved Profitability

    The Housing Finance Company (HFC) business delivered strong growth momentum, with disbursements soaring 76% year-on-year to over 5,400 crore Rupees. This propelled the HFC portfolio to grow 70% year-on-year and 11% sequentially, reaching 34,605 crore Rupees. Profit before tax increased 82% year-on-year to 154 crore Rupees. The HFC segment also demonstrated improved operating leverage, with opex-to-assets improving by 32 bps sequentially to 2.59%, and RoA increasing by 15 bps to 1.59%, with a target of 2-2.2% over the next eight quarters.

    04

    Asset Quality Remains Stable with Targeted Interventions

    Across the NBFC and HFC segments, asset quality remained stable or improved. NBFC's Gross Stage 2 and 3 loans declined by 75 bps year-on-year and 8 bps sequentially to 3.70%, with 74% of the portfolio secured and 41.2% provision coverage on Stage 3 loans. HFC's Stage 3 loans declined by 97 bps year-on-year and 4 bps sequentially to 0.62%. Management highlighted a cautious approach in the smaller ticket size unsecured MSME segment (1.3% of total loan book) due to ongoing uncertainties, but noted that 53% of Stage 3 loans in this segment are covered by government guarantee schemes.

    05

    Robust Performance in Asset Management and Insurance Businesses

    The Asset Management business saw its average AUM grow 14% year-on-year and 6% sequentially, crossing 4 trillion Rupees, with equity AUM up 11% year-on-year. PAT for the AMC grew 18% year-on-year to 277 crore Rupees. In Life Insurance, individual first year premium grew 23% year-on-year, significantly outpacing the private industry average, and net VNB margin expanded by 110 bps to 7.5%. The Health Insurance business continued its rapid growth, with gross written premium increasing 30% year-on-year (40% excluding multi-year guidelines impact), and market share among standalone health insurers rising to 14.5%.

    06

    Omnichannel Distribution and Digital Adoption Drive Customer Engagement

    Aditya Birla Capital continues to strengthen its omnichannel distribution network, adding 67 branches during the quarter to reach 1,690 branches across all businesses, focusing on tier 3 and tier 4 towns. The D2C platform, ABCD, has acquired 6.4 million customers, offering a comprehensive portfolio of over 25 products. The B2B platform for MSME ecosystem, Udyog Plus, now contributes about 30% of the AUM of unsecured business loans, with the ABG ecosystem contributing 37% of disbursements on Udyog Plus, showcasing strong digital adoption and ecosystem leverage.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.