Aditya Birla Capital Limited — Q1 FY26 earnings call

Call held 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

  • 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

  • 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.

Key financials

  1. Consolidated PAT ₹835 Cr +10%YoY
  2. Consolidated Revenue ₹11,333 Cr +10%YoY
  3. Standalone PAT ₹676 Cr +3%YoY
  4. Standalone Tier 1 Ratio 15.6%
  5. Standalone CRAR 18.1%
  6. Standalone RoE (adjusted) 14.4%

What they filed

Q1 FY27: revenue up 24.4%, net profit up 32.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,158 3,792 3,853 4,010 4,507 +8%4,384 +16%4,572 +19%4,990 +24%
EBITDA3,718 3,505 3,795 3,850 4,001 +8%4,307 +23%— —
Net profit1,032 613 654 676 916 −11%740 +21%777 +19%893 +32%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • NBFC Segment
    ₹15,851 Cr Disbursements₹13.10L Cr Portfolio AUM₹689 Cr PAT2.3% RoA3.7% Gross Stage 2 & 3 loans41.2% Provision Coverage (Stage 3)1.3% Credit Cost6% 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
    ₹4.03L Cr Average AUM11% Equity AUM Growth₹277 Cr PAT₹4.43L 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₹1.04L 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)

Capital allocation

high confidence
  • 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.
    On the capital question, yes, our Tier 1 ratio is 15.62% and total cap add is at about 18.11%. During the quarter, we infused INR250 crores in our HFC subsidiary, which is the only company which in a way, needs capital infusion because the asset management company returns dividend. In our insurance companies, we have JV partners and if at all, there will be very minimal capital requirement. So, I would say that looking at the overall capital plan for us, we are sufficiently funded for our growth requirements for the next 9 to 12 months, and we will look at any capital situation post that.

Guidance & targets

Profitability

  • NBFC Credit Cost Profitability · FY26 · Medium confidence 1.30%
    Our credit cost in the current quarter is 1.30% and we expect that it will remain in a similar range for FY26.

    — Vishakha Mulye

  • HFC RoA Profitability · next eight quarters · High confidence 2 to 2.2%
    With this we remain well on track to achieve a ROA of 2 to 2.2% over the next eight quarters in line with our guidance.

    — Pankaj Gadgil

  • Health Insurance Combined Ratio (COR) Profitability · current year itself (FY26) · High confidence 100%
    As we guided earlier, we will continue to strive for 100% COR as per the old accounting regulations in the current year itself.

    — Mayank Bathwal

  • Life Insurance Net VNB Margins Profitability · through the year (FY26) · High confidence 18% plus
    We maintain our guidance to expand our Net VNB margins through the year to achieve 18% plus for the year

    — Kamlesh Rao

  • Life Insurance Net VNB Profitability · next 3 years · High confidence double the value
    and in absolute numbers double the value of our Net VNB in the same time period.

    — Kamlesh Rao

Volume

  • Life Insurance Individual FYP Growth Volume · next 3 years · High confidence 20%+
    we also maintain our guidance to grow Individual FYP at a CAGR of 20%+ for the next 3 years

    — Kamlesh Rao

Capital

  • Capital Sufficiency Capital · next 9 to 12 months · High confidence sufficiently funded
    we are sufficiently funded for our growth requirements for the next 9 to 12 months, and we will look at any capital situation post that.

    — Vijay Deshwal

What to watch in Q2 FY26

NBFC NIM Trajectory

Next few quarters
Current 5.97%
Target Improvement 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.

Risks & concerns

  • Uncertainties in smaller ticket size unsecured MSME segment

    medium

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

    Management acknowledged

  • Consumer leverage in personal and consumer loans

    medium

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

    Analyst acknowledged

  • Global macro-economic environment uncertainty

    low

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

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Unsecured MSME Segment Stress and Government Guarantee Direct
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

NIM Trajectory and Consumer/PL Leverage Direct
The mix of higher-yielding unsecured loan, that is personal and consumer loans and business loans to SME, was at 22% as of June '25... So, we expect that as this portfolio grows and our unsecured business, which is business loans, grows, our margins should start improving. So, in the next few quarters, you will see margins improving from here on... we were ahead of the curve in terms of tightening, recognizing that there is a leverage, which is going up.

Management expects NIM improvement due to product mix shift towards higher-yielding unsecured loans and asserts proactive risk management for consumer leverage.

Asked by Avinash Singh

Capital Raise Plans Direct
On the capital question, yes, our Tier 1 ratio is 15.62% and total cap add is at about 18.11%... we are sufficiently funded for our growth requirements for the next 9 to 12 months, and we will look at any capital situation post that.

Indicates that the company is adequately capitalized for the near term (9-12 months), deferring any capital raise discussions.

Asked by Avinash Singh

LAP Portfolio Performance Direct
So, Abhijit, first, your question on LAP, if you look at, touch wood, I think the performance is very, very strong, in terms of overall performance. And this is our oldest portfolio... both our Stage 2 and Stage 3 has come down significantly... on the HFC question, LAP, as I mentioned, the ticket size for LAP is about INR 54 lakhs. So it is a very small proportion of that is the micro-LAP.

Reassures on the strong and stable performance of the LAP portfolio, noting it's a vintage book with declining Stage 2/3, and clarifies minimal micro-LAP exposure in HFC.

Asked by Abhijit Tibrewal

Write-offs in NBFC and HFC Evasive
We do not disclose write-offs as of now. So, I think we will stay with that.

Management declined to provide specific write-off figures, which could be a point of concern for transparency.

Asked by Abhijit Tibrewal

NBFC Unsecured Business Provision Coverage Direct
As I mentioned, 75% of the principal is guaranteed, so we believe that 35.7% or 36% PCR is quite sufficient in this. But at some point in time, if we believe that the claim is delayed or claim is not coming in and we will have to evaluate, we will do that. But at this point in time, because 75% of the principal is guaranteed, I think this provision coverage is sufficient.

Management defends the provision coverage ratio for unsecured business by emphasizing the high principal guarantee from government schemes.

Asked by Punit Bahlani

HFC Opex Improvement Direct
The expenditure for generating the business, most of it gets booked in the year in which the disbursements happen. And as you will see, the proportion of new disbursements to the overall book as because the book is also increasing, as the proportion keeps reducing, you will start seeing operating leverage kicking in even more.

Explains that operating leverage is kicking in for HFC due to past investments and increasing scale, leading to improved opex-to-assets ratio.

Asked by Punit Bahlani

3 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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%.

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.

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