ADITYA BIRLA CAPITAL

Current Market Price-: 125 Rs

Aditya Birla Capital is a part of the Aditya Birla Group, a USD 44.3 billion Indian multinational in the league of Fortune 500. ABCL is the holding company for the financial services businesses of the Aditya Birla Group. ABCL has a strong presence across Protecting, Investing and Financing solutions.  Its business include Life insurance, Motor Insurance , Housing Finance , Portfolio Management Services , Stock Broking Business, Asset management Company , Health Insurance etc.

Originally incorporated in October 2007 under the Companies Act 1956, Aditya Birla Financial Services Private Limited received the certificate of registration from the Reserve Bank of India in May 2009 to commence the business as non-deposit taking NBFC. In December 2014, the company was converted from a private limited company to a public limited company, and was renamed as ‘Aditya Birla Financial Services Limited’.

During past one decade since its incorporation, the Company has come a long way to become one of the largest financial services players in India. 

The milestones of its journey over past 12 years from 2007-2019 are as follows:

• From 5 business lines to a well diversified portfolio of 13 business lines
• Aggregate AUM1 has grown to Rs. 3,000 billion+
• Lending book (including Housing Finance) has grown to Rs. 601 billion+
• Aggregate revenues have grown to Rs. 115 billion+
• From Investment phase to aggregate earnings before tax of Rs. 12.9 billion+

Powered by more than 22,500 employees, the subsidiaries of ABCL have a nationwide reach with 850+ branches and more than 2,00,000 agents / channel partners and several bank partners.

ABCL’s subsidiaries have As of March 31st, 2021, Aditya Birla Capital Limited manages aggregate assets under management over Rs. 3350 billion, has a consolidated lending book of approx. Rs. 606 billion, and an active customer base of over 24 million, through its subsidiaries and joint ventures.

Aditya Birla group 

Aditya Birla Group, is an Indian multinational conglomerate, headquartered in Worli, Maharashtra, India. It operates in 34 countries with more than 120,000 employees. The group was founded by Seth Shiv Narayan Birla in 1857. The group has interests in viscose staple fibre, metals, cement (largest in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators, financial services and telecom. The group had a revenue of approximately ₹3,42,930 crore (US$48.3 billion) in 2019.

Aditya Birla Capital is a part of the Aditya Birla Group, an Indian multinational in the league of Fortune 500. About 50 percent of its revenues flow from its overseas operations. 

Aditya Birla Group leads in several sectors

Businesses

Insurance

ABSLI is a 51:49 a joint venture between the Aditya Birla Group and Sun Life Financial Inc., an international financial services organization in Canada. ABSLI offers a range of products across the customer’s life cycle, including children future plans, wealth protection plans, retirement and pension solutions, health plans, traditional term plans and Unit Linked Insurance Plans (“ULIPs”).

As of March 2021, total AUM of ABSLI Stood at Rs.526,151 million. ABSLI recorded a gross premium income of Rs. 97,752 million in FY 2020-21 and registering a y-o-y growth of 22% in Gross Premium with Individual Business FYP at Rs 20,760 Mn. ABSLI has a nation-wide distribution presence through 386 branches, 7 bancassurance partners, 6 distribution channels, over 90,000 direct selling agents, other Corporate Agents and Brokers and through its website. The company has over 13,000 employees and more than 17 lac active customers.

About Sun Life Financial Inc, Canada

Sun Life Financial is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life Financial has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of March 31, 2021, Sun Life Financial had total assets under management of CAD 1,304 billion. For more information please visit http://www.sunlife.com. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.

Health Insurance

Aditya Birla Health Insurance Insurance provides proactive healthcare, which extend its approach beyond the conventional mode of just financial support. 

Aditya Birla Health Insurance is a joint venture between the Aditya Birla Group and MMI Holding Limited. This partnership between India’s third-largest private sector conglomerate and one of South Africa’s largest insurance companies with a legacy of 122 years is poised to enable individuals and families lead healthier and happier lives.

Smart technology at the heart of its products helps Aditya Birla Health Insurance stay ahead. By providing digitally integrated, incentivised wellness programs that motivate, customers choose healthier lifestyles as part of its comprehensive health cover.

About Aditya Birla Wellness

Aditya Birla Wellness, is to proactively help individuals and families prioritize their health and help them lead fulfilling lives.  Aditya Birla Wellness approach is to create path breaking products that shift consumer mindset from sickness to wellness and reward a customer for each step towards well-being.  Aditya Birla Wellness

Is business partners with the MMI Holdings, South Africa, in creating the best health risk management products for the Indian market.

Aditya Birla Wellness is pioneers in successfully designing and launching holistic digital wellness product category in the Indian marketplace. A wellness ecosystem coupled with 1 year of unlocked financial rewards on a single digital app/platform is a first of its kind incentivized wellness  innovation in the country.

This completely digital solution is available to cater to retail as well as corporate, banks, affinity customers through the AB Multiply App. 

Aditya Birla Sunlife Mutual Fund

Aditya Birla Sunlife Mutual Fund is the fourth largest mutual fund house by asset size in India. The fund house manages assets worth (AUM) of Rs 2.47 lakh crore for the quarter ending March, 2020.

Aditya Birla Sunlife Mutual Fund is a joint venture between Aditya Birla Group and Canada based financial services company, Sun Life AMC Investments, Inc. Both the parent companies boast of rich legacy of wealth creation and sound management.

Aditya Birla Sunlife Mutual Fund offers approx. 153 schemes to investors. It offers 29 equity schemes, 100 debt schemes, 11 hybrid schemes and 13 ETFs, Gold & Fund of funds schemes. Some of the well-known equity schemes from its stable are Aditya Birla Sunlife Focused Equity Fund, Aditya Birla Sunlife Tax Relief 96 Fund etc. Aditya Birla Sunlife Mutual Fund also offers some good debt funds. Some of the prominent debt schemes are Aditya Birla Sunlife Government Securities Fund, Aditya Birla Sunlife Corporate Bond Fund, Aditya Birla Sunlife Savings Fund etc. Aditya Birla Sunlife Balanced Advantage Fund and Aditya Birla Sunlife Regular Savings Fund are prominent names in hybrid schemes category.

Aditya Birla Pension Management

ABSLPML is registered with the Pension Fund Regulatory and Development Authority (“PFRDA”) to act as a:

• Pension Fund Manager (PFM) of the NPS Trust, for managing the pension funds under the National Pension System (“NPS”), in accordance with the applicable provisions and guidelines issued by PFRDA. ABSLPML commenced operations as a PFM on May 5, 2017.
• Point of Presence (PoP) for the distribution and servicing of the public at large, through physical as well as online platforms, for NPS.

ADITYA BIRLA MONEY LIMITED

Aditya Birla Money Limited, is listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) since 2008. ABML is currently engaged in the business of securities broking and is registered as a Stock Broker with SEBI. It is a member of BSE and NSE and offers equity and derivatives trading through NSE and BSE. It holds PMS license from SEBI and offers portfolio management services.

ABML has a combined pan India distribution network of over 41 branches, spread across Andhra Pradesh, Chandigarh, Rajasthan, Chhattisgarh, Madhya Pradesh, UP, West Bengal, Punjab, Maharashtra, Kerala, Karnataka, Delhi, Gujarat and Tamil Nadu and 755 franchisee offices. It also has a robust online and offline model with a strong technological backbone to support a large registered customer base of around 350,685 customers. It offers a wide range of solutions including broking, portfolio management services, depository and e-insurance repository solutions and distribution of other financial products.

Aditya Birla Finance Limited

Aditya Birla Finance Limited is among the leading well-diversified non-banking financial services company in India. ABFL offers end-to-end lending, financing and wealth solutions to a diversified range of customers across the country. ABFL is amongst the top five largest private diversified NBFCs in India based on AUM.

ABFL caters to the varied needs of diverse set of customers ranging across retail, HNI, ultra HNI, micro enterprises, SME, mid and large corporates. ABFL offers customized solutions in areas of personal finance, mortgage finance, SME finance, corporate finance, wealth solutions, debt capital markets and loan syndication. The company has also created a unique online financing platform, ABFLDirect.com that provides quick, convenient and hassle-free services to retail and MSME customers.

For the year ended 31st March 2021, ABFL has a lending book of Rs. 486.89 billion and a net worth of Rs 88.38 billion. ABFL’s long-term credit rating of AAA (Stable) has been reaffirmed by ICRA in September 2020. ABFL also has long-term credit rating of AAA (Stable) by India Ratings, Perpetual debt credit rating of AA+ (Stable) by ICRA and AA+ (Stable) by India Ratings (Stable) and short-term credit rating of A1+ by ICRA & India Ratings.

Aditya Birla Housing Finance Limited

The company offers a complete range of housing finance solutions such as Home loans, Home Extension Loan, Plot & Home Construction Loan, Home Improvement Loans, Loan Against Property, Construction Financing, Lease Rental Discounting, Commercial Property Purchase Loan and Property Advisory Services. Through its lending solutions, ABHFL enables customers to own their dream home.

ABHFL commenced operations in the housing finance sector in October 2014. ABHFL has significantly expanded its footprint to 74 branches as of 31st March 2021.

Aditya Birla Housing Finance Limited, a fast-growing housing finance company in India with a net worth of Rs.15190 million and lending book value at Rs. 118,690 million as on March 31st, 2021. This is reflected in its long-term credit rating of AAA (Stable) by ICRA and AAA (Stable) by India Ratings, and short-term credit rating of A1+ by ICRA & India Ratings.

It Provides-:

• Home Loans
• Home Extension Loan
• Home Improvement Loan
• Plot & Home Construction Loan
• Home Construction Loan
• Loan Against Property
• Affordable Housing & PMAY

Financials

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• Net Sales at Rs 5,586.83 crore in March 2021 up 15.31% from Rs. 4,844.87 crore in March 2020.
• Quarterly Net Profit at Rs. 375.15 crore in March 2021 up 161.12% from Rs. 143.67 crore in March 2020.
• EBITDA stands at Rs. 1,334.50 crore in March 2021 up 7.64% from Rs. 1,239.78 crore in March 2020.
• AB Capital EPS has increased to Rs. 1.55 in March 2021 from Rs. 0.61 in March 2020.

Adyta Birla Capital has reported 15% rise in the net profit to Rs 288.68 core in the quarter ended December 2020 compared with Rs 250.48 core in the corresponding quarter last year mainly driven by improved margins, while credit cost of the company eased. 

• PBT from Housing Finance moved up 36% to Rs 47.83 crore, Asset Management 12% to Rs 194.10 crore and Life Insurance 7% to Rs 35.89 crore.
• PBT from General Insurance Broking increased 161% to Rs 18.48 crore.
• PBT from Stock & Securities Broking 64% to Rs 5.98 crore in Q3FY2021.
• PBT from NBFC declined 4% to Rs 260.53 crore. 
• Other Financial Services segment recorded PBT of Rs 8.46 crore against loss in Q3FY20.
• Health Insurance segment recorded pre-tax losses of to Rs 50.93 crore in Q3FY2021.

For the nine months ended December 2020 (9MFY2021), 

Consolidated net revenue of the company increased 14% to Rs 13643.54 crore. 

Revenue in NBFC segment declined 10% to Rs 4132.12 crore.

Asset management revenues declined 9% to Rs 870.25 crore. 

Revenue from life insurance moved up 36% to Rs 7134.95 crore.

Revenue from housing finance 1% to Rs 975.18 crore. 

Revenues from general insurance broking increased 7% to Rs 426.64 crore, 

Revenues from health insurance 53% to Rs 777.35 crore.

Revenues from stock and securities broking revenues 14% to Rs 142.87 crore in 9MFY2021 over 9MFY2020.

The interest cost declined 14% to Rs 3011.77 crore and depreciation stood at Rs 85.87 crore, PBT declined 9% to Rs 1045.30 crore in 9MFY2021. Net Profit after non-controlling interest eased 3% yoy to Rs 751.40 crore in 9MFY2021.

Aditya Birla Sun Life AMC

Aditya Birla Sun Life AMC Limited (ABSLAMC), a material subsidiary of Aditya Birla Capital, has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offer by way of an offer for sale of shares of ABSLAMC.

Aditya Birla Capital Limited (ABCL) has approved the sale of up to 28,50,880 equity shares of face value of Rs 5 each held in ABSLAMC out of the total paid-up share capital of 28,80,00,000 equity shares, the company said in a release.

Sun Life (India) AMC Investments Inc, the joint venture shareholder in ABSLAMC, approved the sale of up to 3,60,29,120 equity shares of face value of Rs 5 each held in ABSLAMC through the IPO.

The proposed sale of equity shares by ABCL and Sun Life India in the IPO will together constitute up to 13.50 percent of the paid-up share capital of ABSLAMC.

Company performance

According to reports, AB Sun Life AMC has delivered an annualised profit growth of 26% in the last decade with 15% annualised growth in AUM. The fund house posted net profits of Rs 147 crore for the quarter ended December. According to news reports, the current market capitalisation of Aditya Birla Capital is Rs 30,000 crore and the company draws a huge portion of this value, ie, Rs 13,000 to Rs 14,000 crore from the AMC business alone.

In September 2019, Aditya Birla Capital said it was raising Rs 1,100 crore from a US-based private equity firm Advent International and Indian investor PremjiInvest. The AMC arm of AB Capital had in June 2020 used a video e-KYC system from an AI-based fintech firm to bring in 50,000 new investors during the lockdown. The number of registrations through this video e-KYC method had more than doubled in the January to April period in 2021, as cited by the AMC’s CEO and Managing Director.

Aditya Birla Sun Life Asset Management Company is the investment manager of Aditya Birla Sun Life Mutual Fund. It is also an investment manager to Aditya Birla Sun Life AIF Trust. The Aditya Birla Sun Life AMC has its subsidiaries in Singapore, Dubai and Mauritius. Aditya Birla Capital, which is the financial services platform of the AB Group, has an employee strength of over 17,000 and 2 lakh channel partners and agents.

More than 30 IPOs raised nearly Rs 39,000 crore in FY2021 amidst adequate liquidity and the same trend is expected in FY 2021-22 too. The first quarter of April-June is expected to see anywhere between 10 and 15 IPOs.

Conclusion 

Aditya Birla Capital , a part of Aditya Birla Group is among the one of the oldest family business conglomerates in India with its business spread across numerous sectors. Aditya Birla Group is also one of the fastest growing conglomerates in India. Financial Sector is going through major revolution with the advent of Digitalisation and growth of Internet. Aditya Birla Capital is at the forefront in the technological innovation and is also one of the very early adopters of some of the most advanced technologies such as Online Kyc , Digital Lending and many other technologies for making user onboarding easy and at the same time improving user experience. Additionally 50% of its stake in Aditya Birla AMC gives it significant  value and it is expected that this value could jump significantly on account of IPO. Also sum of the parts of individual businesses combined could be fetch far more valuation as compared to the current value of the company. However due to complexity in estimating the value of each business individually and extremely time consuming we have not carried out sum of the parts valuation therefore we may not be able to comment directly on the Expected future valuations for the company. However going by the sales and profit figures over past 3 – 5 years it can be said that the management is taking every possible step to achieve sustainable growth and will continue to do so. Thus with the ipo on the cards it is worth exploring Aditya Birla Capital for long term.