ICICI Securities has issued a BUY recommendation for Aditya Birla Capital, upgrading the stock from its previous BUY rating. The research house has set a target price of Rs 380, up from Rs 300, reflecting strong operational momentum and improved asset quality across its lending businesses. The report highlights robust growth in both the NBFC and Housing Finance segments, with a clear path toward higher return on assets (RoA) and attractive valuations for investors. The stock is currently trading at Rs 327, offering a compelling upside for those seeking exposure to India’s financial sector.

ICICI Securities Upgrades Aditya Birla Capital to BUY

ICICI Securities has revised its stance on Aditya Birla Capital, moving to a BUY call with a revised target price of Rs 380. The upgrade is based on the company’s robust performance in both its NBFC and Housing Finance segments, which have delivered strong growth and improved asset quality. The research house believes that Aditya Birla Capital is well-positioned to achieve higher RoA in the coming years, driven by better-than-industry growth, effective credit cost management, and operating efficiency gains.

Strong Growth in NBFC and Housing Finance Segments

Aditya Birla Capital’s NBFC business reported a RoA of 2.2% in Q2FY26, with AUM growth of 6% quarter-on-quarter and 22% year-on-year. The company’s margins improved, aided by a reduction in funding costs, while credit costs moderated further. The housing finance arm also delivered robust growth, with AUM up 11% QoQ and 65% YoY, and asset quality metrics at multi-year lows. The research house expects the NBFC business to reach a RoA of 2.2% in the next two years and the housing finance business to achieve a RoA of 2% by FY27.

Asset Quality and Credit Cost Trends

Asset quality remains a key strength for Aditya Birla Capital, with both NBFC and HFC segments reporting declines in stage-2 and stage-3 assets. The NBFC business saw a 14bps QoQ decline in credit costs, now at 1.16%, below the company’s guidance of 120-130bps. The HFC business reported a 5bps QoQ decline in credit costs, with RoA improving to 1.82%. The company’s proactive risk management and operating leverage are expected to drive further improvements in asset quality and profitability.

Valuation and Target Price

ICICI Securities has revised its target multiple for Aditya Birla Capital’s lending business to 2.5x for FY27E, up from 2x earlier. The SoTP-based target price is now Rs 380, reflecting the company’s strong growth trajectory and improved asset quality. The stock is trading at Rs 327, offering a potential upside of around 16% for investors.

Key Financial Metrics and Growth Projections

The following table summarizes the key financial metrics and growth projections for Aditya Birla Capital:

Investment Thesis and Risk Factors

The investment thesis for Aditya Birla Capital is built on its strong execution, robust growth, and improving asset quality. The company’s diversified business model, focus on operating efficiency, and proactive risk management provide a solid foundation for sustained growth. However, investors should be mindful of risks such as slower-than-anticipated loan book growth and margin pressures in the lending business.

Medium Term Investor Outlook

Aditya Birla Capital presents a compelling investment opportunity for those seeking exposure to India’s financial sector. With a BUY recommendation from ICICI Securities, a target price of Rs 380, and strong growth prospects, the stock is well-positioned for upside in the medium term. Investors should monitor the company’s asset quality trends and margin developments for further confirmation of its growth trajectory.