Aditya Birla Capital : A Big Boss of financial services domain

Aditya Birla Capital Ltd (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. It has a presence in segments like life insurance, asset management, private equity, corporate lending, structured finance, project finance, general insurance broking, wealth management, equity, currency and commodity broking.

The loan book in the housing finance business under Aditya Birla Housing Finance Ltd (ABHFL), has grown at an exponential rate of 29x over FY15-17 to Rs4,136 crore and stood at Rs4,816 crore as of 30 Jun’17.

Of the total ABHFL’s loan portfolio, 56 percent is individual housing loans, 32 percent LAP, and 12 percent corporate finance. The business has healthy NIM of 3.2 percent as on 31 Mar’17.

Aditya Birla Capital is a conglomerate of financial services such as NBFC, Insurance, Mutual Funds etc. Its footprint is bigger than that of its arch rivals Bajaj Finserve, Bajaj Finance put together. In addition to other peers like Motilal Oswal, INFL,  Edelwise Financial Services, and others.   

Financial services will continue high growth, Out of all the business in which Aditya Birla Capital has a pie are expected to witness high growth; the insurance and mutual fund business are expected to grow at 20 to 25 percent while the banking/NBFC business can grow at 15 to 20 percent.   Insurance is at the tip of the iceberg. The insurance business has a vast scope and that we have not even scratched the surface yet. 

Aditya Birla Health Insurance (ABHI), a part of Aditya Birla Capital, is focussing on the retail sector to drive growth. During 2016-17 the group sales constituted 80 percent premium income and retail the balance 20 percent.

"We are eyeing the retail sector for growth. In the next five to six years, the target to garner 75 percent of the business from the retail avenue", CEO of ABHI Mayank Bathwal said. In the last financial year, the company earned a premium income of Rs 150 crore, out of which group or corporate sales contributed 80 percent and retail the rest 20 percent.

In the first half of the current fiscal, the company earned a premium income of Rs 96 crore, wherein retail contributed eight percent in the first quarter and increased 32 percent in the second quarter.
Bathwal said that the company commanded a sizable customer base in the MSME sector which was a part of corporate or group sales. The company is also increasing its distribution channels, he said.

We are not even at the starting point of this game called insurance and I think this is going to grow multifold. We are considering all forms of Insurance not just life- so general, health, fire, crop, premises &; "the new segments that would be entered time to time".

This sector is highly under-penetrated with only a few million people having insurance cover.  About 300-400 million more customers are expected to come on board in the next 5 years also the fact that mortality situation of the indian population is improving a lot over the years augers well because the number of claims will reduce.

There is a long way to grow in the life insurance business itself. We have seen strong flows in the asset management business. There is a huge opportunity in the NBFC space given the credit to GDP is low. From a macro perspective or industry perspective, there is huge headroom for growth. Growth can be seen in each vertical.

It is a Wealth Creator investment without any hesitation owing to its blue-chip credentials.  At the current level, it is good to buy for only long-term investors who want to really create wealth for their themselves, family, children.....

At current level trading around 180 - our short-term target is around 400 to 500 & long-term target say 5 years and above  1500 to 2000.

What may happen & what we may be expecting in future in this company :

1. This company will become amongst top 3 company in NBFC sector against all peers:

such as Bajaj Finserve, Bajaj Finance, Motilal Oswal, Geogjit, IIFL, Edelwise finance etc.  Because these are companies having an excellent premium and face value of Rs. 1 or 2   whereas against the Aditya Birla Capital available at face value of 10.  So if you compare these companies with Aditya Birla Capital, it is available almost at negligible price looking at fundamentals............

2.  We are expecting in only long-term...  say 5-10-15-20 years......... (as wealth creation like in Titan) it will move upside 1000-2000-3000-4000-5000  in coming years, on the way it will split into 1 to 2 face value.
Apart from that a number of subsidiaries are there in this company such as 

1. Birla Sunlife Insurance Company
2. Birla Sun Life Asset Management Company
3. Aditya Birla Finance
4. Aditya Birla Housing Finance
5. Aditya Birla Insurance Brokers
6. Aditya Birla ARC
7. Aditya Birla Wellness
8. Aditya Birla Capital Advisors
9. Aditya Birla Finance shares services
10. Aditya Birla Customer services
11. Aditya Birla Health Insurance 
12.  Aditya Birla Money.

Around 12 companies are under Aditya Birla Capital.

3.  Also important, sooner or later it will have a demerger in coming years, value of this company is beyond current imagination, so we advise to all our readers/visitors to study this stock and may consider to after detailed analysis to buy at CMP of 180 with a good time frame/ good quantity looking towards long-term wealth creation.

Next Read: What is Relative Strength Index
Next Read: L&T Finance Holding is it a good stock for the long term?
Previous Read: Edelweiss Financial Services a Long-term player