ABCAPITAL

Rides NBFC Momentum

has outperformed the market with over 10% stock gains in the past month, driven by robust lending growth, improving asset quality, and strong performance across insurance and asset management. The company’s diversified financial services model and digital platforms continue to support long-term growth visibility. ABCL’s NBFC and housing finance portfolio grew steadily to ₹1.77 lakh crore. Personal, consumer, and unsecured business loans saw momentum, aided by digital sourcing recalibration. Platforms like Udyog Plus (₹5,000 crore AUM) and ABCD (D2C acquisition engine) are scaling well, supporting future disbursement growth. Gross Stage 2 & 3 ratios declined 121 bps YoY, reflecting tighter underwriting and better sourcing. Housing finance profitability surged due to improved asset quality, productivity, and rising contribution from the Aditya Birla Group ecosystem (16% of retail disbursements). High-margin segments like LAP and construction finance boosted return ratios. Life insurance saw a 19% YoY rise in individual FYP and a 420 bps jump in VNB margin, now guided at 18% for FY26. Health insurance outpaced industry growth, gaining 200 bps market share to reach 11.9% among SAHI players. Combined ratio improved to 108% from 113% YoY, driven by retail and health-first model scale-up. Average AUM rose 11% YoY, but net profit declined due to lower other income and weak equity market performance. Despite this, the business remains aligned with macroeconomic growth and offers long-term upside. ABCL’s diversified model, digital transformation, and merger synergies position it well for H2FY26. Structural reforms, GST rationalisation, and rising capacity utilisation are expected to support lending growth. Valued on a sum-of-the-parts basis, the stock offers attractive upside at current levels.