Aditya Birla Capital predicts 27% increase in Q3 PAT due to growth in AUM

Aditya Birla Capital Ltd. is poised to announce a significant increase in its bottom line for the December quarter, with brokerages attributing this growth to the anticipated rise in the company’s assets under management and improvements in net interest margins. Analysts have specifically forecasted positive figures for the company’s diversified non-banking finance division, with an estimated bottom line of INR 7.64 billion for the fourth quarter, reflecting a robust 27% year-on-year increase.

Net interest income for the company is projected to hit INR 21.79 billion, showing a promising growth of over 9% on a quarterly basis, and nearly 26% on an annual basis. The company’s net interest margin is also expected to climb, with estimates suggesting a year-on-year increase of 6-53 basis points and a sequential rise of 2-21 bps. Brokerage firm JM Financial attributes this margin improvement to the growth in disbursement and a slight decrease in the cost of funds in the diversified non-banking finance industry.

Aditya Birla Capital’s assets under management are anticipated to reach INR 1.48 trillion, marking a 6% increase from the previous quarter and a substantial 24% surge year-on-year. Provisions for the company are estimated at INR 4.02 million, showing an uptick of almost 6% from the previous quarter. Credit costs, however, remain a point of contention among analysts, with varying predictions on whether it will remain flat or sees a slight increase on a quarterly basis.

Despite these uncertainties, all five brokerage reports available from Informist recommend a ‘buy’ rating on the stock, with an average target price of INR 368, representing an over 8% premium on the current market price. The company is expected to release its December quarter results on Tuesday following an over 1% increase in its stock since the September quarter report.

Overall, Aditya Birla Capital’s performance in the upcoming quarter is primed for growth, driven by its strong assets under management and improved net interest margins. With positive projections from brokerage firms, the company’s bottom line is set to reflect this promising outlook, showcasing the potential for continued success in the non-banking finance sector.