Aditya Birla Capital IC 6nov23

6 November 2023
INDIA | NBFC |
COVERAGE INITIATION
Aditya Birla Capital

Reinvigorated; racing ahead
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Well diversified Digital initiatives Strong Parentage of
products portfolio to leverage growth Aditya Birla Group
6 November 2023
INDIA | NBFC |
COVERAGE INITIATION
Table of Contents Page No
Introduction 3
Focus Charts 4
Aditya Birla Capital (ABCL) – Company Overview 8
Leadership change driving coherent strategy & execution focus 10
Aditya Birla Finance (NBFC) – Well diversified products portfolio 15
Aditya Birla Housing Finance (HFC) – Diversified across prime and affordable 25
Aditya Birla Sun Life AMC (ABSL AMC) – Regaining lost market share key 31
Aditya Birla Sun Life Insurance (ABSL) – steady ROEVs of 15% going ahead 35
Aditya Birla Health Insurance (ABHI) – retail focus driving performance 38
Other Businesses 40
Key Management Personnel 41
SOTP Valuations 44
Key risks 45
Aditya Birla Capital is a financial conglomerate with businesses spread across NBFC,
HFC, life insurance, health insurance with ample opportunities to cross-sell products
across the entities. We reiterate BUY rating on the company with a target price of INR
220 based on SOTP valuation assigning: i) 2.0x FY25E P/B for Aditya Birla Finance, ii)
2.0x FY25E P/B for Aditya Birla Housing Finance, iii) 1.8x FY25E P/EV for Aditya Birla
Sun Life Insurance, and iv) 25x FY25E P/E for Aditya Birla SunLife AMC.
RECENT REPORTS
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JM Financial Institutional Securities Limited Page 2

6 November 2023
INDIA | NBFC |
COVERAGE INITIATION
Aditya Birla Capital

Reinvigorated; racing ahead
Aditya Birla Finance Ltd (ABFL) – Retail and SME growth to drive
Aditya Birla Capital, under its new leadership, is reinvigorating
earnings growth: Fastest-growing multi-product NBFC with a pan-India
its execution strategy to drive sustainable growth and improve
presence slated to deliver healthy earnings with 2.7%/17% of RoA/RoE
profitability. Its greater thrust on technology (Udyog Plus by FY25E. We value ABFL at an implied P/BV of 2.0x FY25E, implying a
platform), razor sharp focus on cross sell opportunities across value of INR 375bn.
the Aditya Birla Group and emphasis on risk management Aditya Birla Housing Finance Ltd (ABHFL) – Balanced product mix
should see well-diversified growth, in our view. While asset to compete acros the industry: Rapidly gaining momentum with rising
quality of ABCL’s NBFC entities (Aditya Birla Finance and Aditya penetration of affordable housing; poised to achieve PAT CAGR of 24%
Birla Housing) stood up relatively better within the NBFC over FY23-25E. We value ABHFL at 2.0x FY25E P/BV, implying a value
universe post-IL&FS crisis, growth moderated and was further
of INR 62bn.
impacted through Covid19. Aditya Birla Sun Life AMC (ABSL AMC): ABSL AMC is 6th largest AMC
in India and 2nd largest non-bank affiliated AMC in India. While the AMC
As Covid19 induced challenges have subsided, ABCL’s has seen a prolonged period of underperformance with muted AUM
lending businesses are focusing on SME and retail segments growth, we expect it to get back to growth ways and clock in MF AUM
across secured and unsecured products. Technology CAGR of 15% over FY23-25E led by strong revival in equity segment
partnership initiatives are aiding customer acquisition and (CAGR 20% over FY23-25E). PAT/Avg AUM is expected to remain
asset quality performance has been improving consistently. healthy at 0.23% aided by operating leverage and we value ABSL AMC
We expect both lending businesses to witness improvement at 25x FY25E P/E, implying a value of INR 184bn.
in RoA led by the emerging product mix and lower credit Aditya Birla Sun Life Insurance (ABSL): ABSL’s growth has been driven by
costs going forward. While the AMC business has seen a a) scaling up of banca partnerships, b) increasing share on non-par and c)
improvement in persistency. Going forward, we expect APE growth to be at
prolonged period of underperformance, we expect it to
14% over FY23-25E with NBV margins normalising back to 14-15% levels.
bounce back to growth ways led by strong revival in equity
We value BSL at 1.8x FY25E P/EV, implying value of INR 222bn.
segment. We expect Life insurance business to continue on
Reiterate BUY on ABCL with SOTP-based TP of INR 220/share: We
its strong growth and profitable trajectory (though
assign INR 123 per share for AB Finance, INR 24 per share for AB
normalisation expected in FY24E) aided by scale up of banca Housing Finance, INR 30 per share for the 50% stake in the AMC
partnerships, cross-sell to ABG eco-system and balanced business, INR 37 per share for the 51% stake in life insurance, INR 1 for
product mix. AB Money and INR 4 per share for other businesses - Aditya Birla Health
Insurance, PE Advisors and insurance brokers.
We resume coverage with a BUY rating on the
Key risks: Higher-than-expected credit costs, tightening liquidity, interest
company with a target price of INR 220.
rate volatility, an increase in tax rate for the life insurance business and
sustained weakness in the stock market adversely impacting MF inflows.
Recommendation and Price Target Financial Summary

Current Reco. BUY
Aditya Birla Capital SOTP Holding Valuation HoldCo Value Contribution
Current Price Target (12M) 220
Upside/(Downside) 27.1% Per
(%) Methodology Discount To TP (%)
Key Data – ABCAP IN
share
Current Market Price INR173
Market cap (bn) INR450.0/US$5.4 Aditya Birla Finance 100% 2.0x FY25E P/B 15% 123 56%
Free Float 29% Aditya Birla Housing Finance 100% 2.0x FY25E P/B 24 11%
Shares in issue (mn) 2,599
Aditya Birla Sun Life Insurance 51% 1.8x FY25E P/EV 15% 37 17%
Diluted share (mn)
3-mon avg daily val (mn) INR627.4/US$8.3 Aditya Birla Sun Life AMC 50% 25x FY25E P/E 15% 30 14%
52-week range 119/116 Aditya Birla Money (listed) 74% Current Market Cap 15% 1 1%
Sensex/Nifty 64,364/19,231 Others (Insurance brokers, Health Insr, PE) 15% 4 2%
INR/US$ 83.3
Total (rounded off) 220 100%
Source: Company, JM Financial; Valuation as of 03/Nov/2023
Price Performance
% 1M 6M 12M JM Financial Research is also available on: Bloomberg - JMFR <GO>, Thomson Publisher & Reuters S&P Capital IQ and FactSet. You
can also access our portal: www.jmflresearch.com. Please see Appendix I at the end of this report for Important
Absolute -4.2 2.2 44.6
Disclosures and Disclaimers and Research Analyst Certification.
Relative* -1.8 -3.0 36.9
Sameer Bhise Mayank Mistry Apurva Deshmukh
*To the BSE Sensex
sameer.bhise@jmfl.com mayank.mistry@jmfl.com apurva.deshmukh@jmfl.com
Tel: (91 22) 66303489 Tel: (91 22) 62241877 Tel: (91 22) 66303263
Gayathri Shivaram Shreyas Pimple
gayathri.shivaram@jmfl.com shreyas.pimple@jmfl.com
Tel: (91 22) 66301889 Tel: (91 22) 6630 1881
Aditya Birla Capital 6 November 2023
Aditya Birla Capital – Focus Charts
Exhibit 1. ABFL: AUM growth trend Exhibit 2. ABFL: Disbursements growth trend
AUM (INR bn) YoY Growth (%) Disbursements (INR bn) YoY growth (%)
1,400 50% 757
1,239 800 105% 120%
1,200 40%
700 100%
46%
609
997
600 63% 80%
1,000 30%
492
806
500 60%
800 20%
400 24% 24% 40%
24% 24%
552 300 3% 240 20%
600 471 487 10% 200 143 148 0%
13% -29%
400 0% 100 -20%
3% 0 -40%
200 -10% FY20 FY21 FY22 FY23 FY24E FY25E
-9% Source: Company, JM Financial
0 -20%
FY20 FY21 FY22 FY23FY24E FY25E
Source: Company, JM Financial
Exhibit 3. ABFL: Yields, and cost of borrowings trend Exhibit 4. ABFL: Margins trend
Yield on loans Average cost of borrowings NIM (%) Spread (%)
14% 13.2% 13.3% 6.5% 6.0%
11.9% 6.0%
11.5% 5.7%
11.3% 6.0%
12% 10.8% 5.3%
5.5%
10%
5.0% 4.5%
8% 4.1%
8.2% 4.5%
7.8% 7.9% 4.9% 4.8%
6% 7.1% 4.0% 4.6%
6.6% 4.2%
6.2% 3.5%
4% 3.0%
FY20 FY21 FY22 FY23 FY24E FY25E 3.3%
2.5%
Source: Company, JM Financial 2.9%
2.0%
1.5%
FY20 FY21 FY22 FY23 FY24E FY25E
1
Exhibit 5. ABFL: Gross stage 3% and provision cover trend . Exhi
0 bit
Gross Stage 3 (%) Net Stage 3 (%) % 6.
4.5% 60%
0 ABF
46.2% 48.0% 48.0% . 50% L:
4.0% 0 Retu
40%
41.5% % rn
FY24E
FY25E
30% ratio
FY20
FY21
FY22
FY23
3.5% 39.5%
20% s
3.0% 31.0%
2.5% Sourc
10% 3 RR
e:
2.0% Comp . OO
any, 0% 0 AE
1.5% JM
%(
Finan
9%3.
7%2.
0%3.
7%1.
6%3.
2%2.
1%3.
5%1.
1.7%
2.9%
1.5%
2.8%
0.5%
cial %(
) RHS) (%) 0
.9
5.
%1 18%
2.51%
%
2.40% 0 16%
2.5% 2.20% .
14%
2.06% 17.3% 0
16.8% % 12%
FY24E
FY25E
FY20
FY21
FY22
FY23
2.0% 10%
1.55% 1.50% 14.6%
Sourc 8%
1.5% e:
1.0% Comp 6%
11.9% any,
10.5% JM
Financ
ial

Exhibit 7. ABHFL: AUM growth trend Exhibit 8. ABHFL: Disbursements mix

AUM (INR bn) YoY Growth (%) 25% Disbursements (INR bn)
240
20% 90.0
20% 195
78.2
200 15%
80.0
163
10% 65.2
20%
70.0
160 5%
60.0 53.0
136
0% 50.0
121 118 119
37.2
120 14% -5%
40.0
80 27.4
6%
30.0
40
20.0
-3%
10.0
1%
0.0
0 FY24
FY25
FY21 FY22 FY23 FY24E FY25E
Y
Y
F
Y
E
2
3
F
2
2
2
1
E
FY

20
Exhibit 9. ABHFL: Yields, CoFs trend Exhibit 10. ABHFL: Margins trend
Yield on loans Avg. CoFs NIM (AUM) (%)
11.5%
11.4% 6%
12% 4.7% 4.9% 4.9%
10.5% 10.7%
10.3% 5%
9.9% 4.0%
10% 4%
8.5% 3.1%
7.6% 7.5% 7.5% 3% 2.6%
8%
2%
6.5% 6.6%
1%
6%
4%
0%
2%
FY20 FY21 FY22 FY23 FY24EFY25E
Source: Company, JM Financial Source: Company, JM Financial
Exhibit 11. ABHFL: Trend in asset quality

3.7
Gross Stage 3 (%) Net Stage 3 (%) PCR (RHS) (%) 45%
4.0% 40% 3.5
3.5% 35% 40%
3.0% 30% 3.0 43.8% 2.8 33.9%
3.3
2.4 35%
1.9
2.5% 25%
%
%
3%1.
9%2.
9%1.
7%2.
8%1.
1.3%
0.9%
3.5%
2.8%
2.2%
2.5 37.5%
2.0% 20% 30%
1.5% 15% 33.7% 2.0
1.0% 10% 2.0 25%
0.5% 5% 1.4
FY2
FY
20%
FY2
23
0.0% 0%
1
FY24E
2
FY20
1.5
FY2
5E
1.0 22.1%
15%
1.0
0.5 15.1% 10%
Exhibit 13. ABHFL: PAT to grow at 24% CAGR over FY23-25E 5%
4.0 PAT (in INR bn) YoY Growth (%) 50%
Exhibit 12. ABHFL: Stress book (stage 2+stage 3)
FY2
0.0 0%
FY21
FY22
Stage 3 Stage 2
FY25E
FY24E
FY20
10.0% 9.1%
8.7% 8.8%
8.1%
7.7%
8.0%
6.9% 5.4% 5.3% 5.1% 4.5% 4.1% 5.0%
6.0% 4.8%
4.4%
4.0% 1.8%
2.1%
1.8%
2.0%
3.1% 3.7% 3.5% 3.7% 3.6% 3.7% 3.2%
2.7% 2.6%
0.0%
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Exhibit 14. ABHFL: Return ratios trend
ROA (%) ROE (RHS) (%)
2.5% 12.7% 16%
2.0% 12.2%
11.8%
13.1% 12%
1.5%
9.5%
8.0%
1.0%
8%
0.5%
0.8% 1.1% 1.6% 1.8% 1.8% 2.0%
0.0% 4%
FY23
FY25E
FY21
FY24E
FY20
FY22

Exhibit 15. ABSL AMC: MF AUM growth Exhibit 16. ABSL AMC: Equity MF contribution has increased
Equity MFs Debt MFs Liquid MFs Equity MFs Debt MFs Liquid MFs Others (ETF + FoF)
Others (ETF + FoF) Total AUM YoY(%)
4,000 40% 100%
28% 3,476 16%
3,500 22% 23% 23%
23% 3,053 30% 27%
2,782 80% 23% 23% 22%
3,000
2,594 2,623 60% 47%
16% 38% 39% 27% 22% 21%
2,385 14% 20% 44% 24%
2,500 2,301 40%
2,024
7% 46% 47%
2,000 4% 10% 43% 43%
1,500 20% 37% 39% 38%
-6% 0% 33%
1,000
-15% 0%
-10% FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
500
0 -20%
FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Exhibit 17. ABSL AMC: PAT growth Exhibit 18. ABSL AMC: Profitability and RoEs
PAT (INR mn) YoY (%)

70% PAT / Avg. AUM RoE (%) (RHS)
8,000
60% 0.30% 45%
7,000 39%
40%
50% 0.25% 33% 38%
6,000 35%
40% 35% 34%
5,000 0.20% 24% 30%
30%
4,000 25%
20% 0.15% 25%
20%
3,000 10% 24%
0.10% 15%
2,000 0%
3,486
4,468
4,944
5,263
6,728
5,964
6,394
7,374
10%
0.17%
0.23%
-10% 0.05%
5%
1,000 -20% 0.00% 0%
0.22%
19%0.
0.23%
25%0.
22%0.
23%0.
FY18 FY25E
0
FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY1
9 FY20 FY21 FY22 FY23 FY24E
Exhibit 19. ABSL: NBAP margins post-cost overruns Source: Company, JM Financial Exhi
25% 23% bit
20.
20% ABS
L:
15% 15% RoE
14% V
15% and
11% EV
10% tren
ds
10%
1
7% 4
0 2
5%
. 3
0%
0 %
1
FY19FY20FY21FY22 FY23FY24e FY25e
2
0.0
15% 15% 15%
100.0
13% 14% 15% 24%
80.0 21%
60.0 18%
15%
40.0
104
121
90
12%
52
49
64
76
20.0 9%
6%
0.0 3%
FY24e
FY23
FY25e
0%
FY20
FY19
FY21
FY22
EV (INR bn) (LHS) ROEV (%) (RHS)

Exhibit 21. ABHI: Trend in gross written premium with split in Exhibit 22. ABHI: Trend in market share in health segment
retail and group Market share among SAHIs Market share among Industry
Retail and rural Group 12%
30,000 10.4%
27,170 10%
25,000 8.3% 8.3%

8% 7.3%
41%
20,000
6%
17,270
4.4%
15,000 13,010 23% 4%
18% 2.8%
8,720 2.0% 2.1%
10,000 2% 1.5%
59% 0.9%
28%
0%
4,970 77%
FY19 FY20 FY21 FY22 FY23
5,000 82%
35%
72%
65%
0
Exhibit 23. ABHI: Combined ratio improving Exhibit 24. ABHI: Loss trend over the years
Claims Ratio Combined Ratio
Loss after Tax (INR mn)
160% 0
149%
134%
140%
-500
126%
120%
120% 110%
-1,000 (1,990)
(2,200)
(2,460)
100% (2,570)
-1,500
(3,110)
80% 72% 70%
65%
59% 59% -2,000
60%
-2,500
40%
-3,000
20%
0% -3,500
FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23

Aditya Birla Capital – Company Overview

Diversified presence in the financial services space
Aditya Birla Capital Limited (ABCL) is a diversified financial company with a presence in
segments such as NBFC (non-banking finance company), housing finance, asset
management, insurance, and financial advisory. ABCL offers an end-to-end product suite
across the lifecycle of customers to address their financial needs (home, personal, SME
and corporate loans), protection requirements (life, health and motor insurance), and
investments (AMC, wealth management, private equity and broking). It also provides
advisory tools for financial planning and money management. The amalgamation of all
financial products and services under a single platform is not only convenient from a
customer perspective but also enables ABCL to use its presence across multiple product
segments to retain customers and cross-sell its products.
ABCL operates in eight lines of businesses and holds majority stake in these subsidiaries
which includes 1) commercial and retail finance, 2) housing finance, 3) asset management
and 4) life insurance businesses. In the health insurance business, its stake has recently
reduced to 45.9% (vs 51% earlier) post preferential allotment of 9.99% to Abu Dhabi
Investment Authority. ABCL also has a presence in securities broking, and insurance
broking. ABCL, through its subsidiaries and joint ventures, has AUM of over INR 4trln and
a lending book of over INR 1.1trln as of 30 th -Sep’23. With over 34,000 employees, ABCL
has a nationwide reach with 1,403 branches across 300+ cities and more than two lakh
agents/channel partners.
ABCL is a part of the Aditya Birla Group (ABG), an USD 44.3bn Indian multinational
corporation. ABCL was a 100% subsidiary of the erstwhile Aditya Birla Nuvo Ltd (ABNL).
After ABNL’s merger with Grasim, ABCL was carved out as a separate listed entity.
Grasim, ABG’s flagship company, owns ~53% and other promoter group entities own
~16% in ABCL.
Exhibit 25. ABCL – Company structure

Exhibit 26. Aditya Birla Capital - Key financial metrics

Aditya Birla Capital FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E CAGR/Change CAGR/Change
(FY18-23) (FY23-25E)
Aditya Birla Finance
Networth (INR bn) 62 73 81 88 99 114 157 187 13% 28%

Loan book (INR bn) 421 502 460 476 536 788 975 1,213 13% 24%
PAT (INR bn) 7.0 8.7 8.0 7.7 11.1 15.5 22.8 29.7 17% 38%
Gross NPL (%) 1.0% 1.8% 3.8% 3.0% 3.8% 3.7% 3.2% 3.1%
Net NPL (%) 0.4% 1.0% 2.7% 1.7% 2.2% 1.7% 1.5% 1.5%
RoA (%) 1.8% 1.8% 1.5% 1.5% 2.1% 2.2% 2.4% 2.5%
Leverage (x) 7.0 7.2 6.4 5.7 5.8 7.4 6.7 7.0
RoE (%) 12% 13% 10% 9% 12% 15% 17% 17%
Aditya Birla Housing Finance FY18 FY19 FY20 FY25E (FY18-23) (FY23-25E)
FY21 FY22 FY23 FY24E
Networth (INR bn) 8 12 14 15 17 20 27 31 21% 26%

Loan book (INR bn) 82 114 121 118 119 136 163 195 11% 20%
PAT (INR bn) 0.4 0.7 1.0 1.4 2.0 2.4 2.8 3.7 45% 24%
Gross NPL (%) 0.6% 0.7% 1.3% 1.9% 3.5% 3.3% 2.9% 2.7%
Net NPL (%) 0.4% 0.4% 0.9% 1.3% 2.8% 2.2% 1.9% 1.8%
RoA (%) 0.6% 0.8% 0.8% 1.1% 1.6% 1.8% 1.8% 2.0%
Leverage (x) 10.7 9.7 9.5 8.1 7.3 7.2 6.3 6.5
RoE (%) 7% 8% 8% 9% 12% 13% 12% 13%
Aditya Birla AMC FY18 FY19 FY20 FY25E (FY18-23) (FY23-25E)

Networth (INR bn) 11.4 12.2 13.2 17.0 22.0 25.2 28.4 32.1 17% 13%
AUM (INR bn) 2,301 2,385 2,024 2,594 2,782 2,623 3,053 3,476 3% 15%
PAT (INR bn) 3.5 4.5 4.9 5.3 6.7 6.0 6.4 7.4 11% 11%
Equity as % of total AUM 37% 39% 33% 38% 43% 43% 46% 47%
Cost to Income (%) 59% 52% 44% 39% 34% 39% 40% 39%
RoE (%) 32.7% 37.9% 39.0% 34.8% 34.5% 25.3% 23.9% 24.4%
Aditya Birla Life Insurance FY18 FY19 FY20 FY25E (FY18-23) (FY23-25E)
APE (INR bn) 12 19 19 22 25 34 39 44 23% 13%

NBV (INR bn) 0.52 1.20 1.26 2.19 3.69 8.00 5.40 6.65 73% -9%
NBAP Margins (%) 4.3% 9.8% 6.9% 10.6% 15.0% 23.0% 14.0% 15.0% 18.7% -8.0%
EV (INR bn) 43 49 52 64 76 90 104 121 16% 16%
Oper. RoEV (%) 10.7% 15.0% 13.2% 13.7% 15.4% 22.6% 15.0% 15.4% 11.9% -7.2%
APE Mkt share - industry (%) 1.6% 2.4% 2.1% 2.3% 2.4% 2.7%
APE Mkt share - pvt (%) 3.2% 4.5% 4.2% 4.4% 4.3% 4.7%

Leadership change driving coherent strategy & execution focus

ABCL has merged together its diversified financial franchise into a single-stop shop
locations called “One ABC” which offers products across the entities i.e. loans, insurance
and mutual funds all at one place. There are currently 201 One ABC locations (as of
2QFY24) and the company is inclined to aggressively expand such branches across other
locations which would offer them a healthy growth momentum. The company is moving
towards “One ABC, One P&L” approach which focuses on a business strategy that
revolves around three levers: One Customer, One Experience and One Team.
Exhibit 27. One ABC Architecture
Source: Company, JM Financial, Note: 155 One ABC locations is as at Mar’23.

ABCL has invested on multiple digital initiatives with widespread adoption of technology
and introduction of newer digital modes for customers and partners since FY21 and has
succeeded in gaining sustained growth momentum across the products.
Direct-to-Customer (D2C) Platform: ABCL incorporated a wholly owned subsidiary,

Aditya Birla Capital Digital Limited to build an omni-channel D2C platform for delivering
Protecting, Investing, Financing and Advising (PIFA) solutions to its customers under one
roof. The D2C platform would be integrated with various touchpoints such as mobile app,
website, branch, and virtual engagement channel (VRM) to serve existing customers and
acquire new customers. The VRM channel of the platform went live in Mar'23 and the
website and app are expected to go live in 2HFY24.
Exhibit 30. D2C Platform offering PIFA products

Udyog Plus - B2B platform for MSME ecosystem: ABCL launched a unified B2B
platform ‘Udyog Plus’ to offer lending solutions, using traditional and alternate data
sources along with value added services for the MSME ecosystem. These lending
solutions include a paperless digital journey for business loans of up to INR 1mn. Udyog
Plus has been integrated with the government and private e-commerce websites to
provide credit facilities to sellers on these platforms. Recently, it got integrated with
Ultratech app and Aditya Birla Group (ABG) platform. It has 164k registrations so far and a
monthly disbursements run rate of INR 500mn coming in from ABG ecosystem.
Exhibit 31. Features of Udyog Plus platform
Payment Strategy: ABCL signed an MOU with the National Payments Corporation of India
("NPCI") to develop and promote a complete stack of digital payment methods through
subsidiaries to its customers. The payments handle enables new customer acquisition and
would increase brand recall. It would also be made available to the MSME ecosystem.
Exhibit 32. ABC Payment Strategy

Infinite (Start-up engagement Programme): ABCL launched INFINITE, a flagship start-

up engagement programme, to collaborate with tech-driven start-ups and co-create
innovative solutions for enhancing customer journeys and increasing operational
efficiencies across businesses.
Digital Adoption: ABCL launched an industry first end-to-end digital loan life cycle for
housing finance business. In AMC business, about 7-8% of customers were onboarded
digitally in 2QFY24. In life insurance, 80% of renewals were done digitally and in Health
Insurance business, 85% business is delivered by auto-underwriting.
Exhibit 33. End-to end Digital Loan process features
Exhibit 34. Digital partnerships and assets

Exhibit 35. Digital adoption in insurance business

Aditya Birla Finance (NBFC)

Well diversified product portfolio
Aditya Birla Finance Limited (ABFL) has a diverse product suite with secured business loans
(39% of total AUM), corporate/mid-market loans (31%), personal loans and consumer loans
(21%) and unsecured business loans (10%). The company operates through a network of 375
branches (as of 2QFY24) with more than 75% presence across tier 3/4 cities.
During FY19, corporate loans accounted for majority of the total AUM at 47%. Since then,
the company started diversifying its products with largely growing its retail book. The
corporate book now contributes ~31% of total loans as at 2QFY24, largely on account of
expansion in unsecured personal loans and business loans (up from ~19% of total share
in FY22 to ~31% in 2QFY24). We believe this trend will continue in the medium term on
the back of strong MSME and retail demand.
Exhibit 36. Diversification across products

Corporate/Mid-Market Unsecured Business Secured Business Personal & Consumer
100.0%
37% 35% 33% 33% 31% 31% 31%

80.0% 40% 38%
10% 10% 10% 10% 10% 10%

60.0% 10%
8%
42% 40% 40% 39% 39%
8% 44% 43%
40.0%
44% 45% 12% 15% 18% 19% 21% 21%
9%
20.0%
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
7% 8%
0.0%
2Q22
3Q22
Exhibit 37. ABFL – Product portfolio

Strong growth opportunity from MSME credit gap and Udyog plus launch
According to a report published by the International Finance Corporation (IFC) in Nov’18,
it was estimated that credit demand for India's Micro, Small, and Medium Enterprises
(MSMEs) in FY17 amounted to INR 69.3trn. However, only approximately 16% of this
demand was met through formal financing, leaving a significant credit gap of INR 58.4trln.
Over time, with an assumed annual increase of about 9% in both credit demand and
availability from formal sources, the credit gap is estimated to have further widened to INR
85trn by FY22. (Refer our report on MSME sectoral trends. Click here)
ABFL’s loans to MSMEs contribute to 49% of total AUM (38% secured and 10%
unsecured). The company’s secured business loans portfolio has an ATS (average ticket
size) of INR 18mn, which is also now expanding its products with lower ticket size loans.
This should aid in healthy growth from this segment.
Launch of Udyog Plus platform to enhance growth
ABFL has launched a comprehensive B2B platform to offer MSME loan products digitally. The
platform is integrated with public databases like OCEN (Open Credit Enabled Network) and
ONDC (Open Network for Digital Commerce). It already has 164k MSMEs registered as of
2QFY24. This platform is used to assess customers based on standalone as well as alternate
data sources to provide loans to them. Loans < INR 0.2mn are underwritten digitally based on
CIBIL while loans with ticket size INR 0.2mn-1mn are evaluated based on uploaded financial
statements. Loans with ticket size > INR 1mn will be evaluated physically at the branches.
ABCL plans to cross sell these loan products to Aditya Birla Group dealers and vendors by
integrating the app with its in-house system. The app is already integrated with Ultratech’s trade
app and ABG platform. We believe this will aid in strong growth, going forward.

Focus on relatively higher ticket business loans than peers

The secured business segment (39% of total AUM) comprises of Loans against property
(LAP), Lease Rental Discounting (LRD), Loans against securities (LAS) and working
capital (WC) loans to MSMEs. Current ATS in the segment is INR 18mn, which is higher
than most of the LAP products in the market, while the yields for the same are also lower
on account of better credit profile of borrowers. However, banks are the largest competitor
for the segment. ABFL, due to its favourable cost of funds (CoFs), competes well in the
segment unlike a majority of the NBFCs that are unable to compete with banks in terms of
interest rates. ABFL is now incrementally focusing on small ticket segments that offer
higher yields i.e., secured SME loans (ATS INR 2.5mn-3mn) resulting in direct competition
with mid-size NBFCs like Poonawalla and Chola.
It has now also started offering micro LAP (ATS 0.8mn-0.9mn) at 19-20% yields offering
the company an opportunity to expand its overall NIMs (net interest margin) in the rising
rate scenario. The product is currently live in more than 72 branches, located mainly in
Gujarat, Rajasthan, Odisha, Jharkhand and Bihar, and focused mainly in tier 3-4 regions.
In the unsecured segment too, ABFL offers slightly higher ticket size business loans and
supply chain loans as compared to its competitors. 60-70% of these loans are secured by
SIDBI’s CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme
in return for guarantee premium for 75% of the principal amount.
Exhibit 38. Secured loans mix Exhibit 39. Unsecured loans mix
LAS TL/WCDL LR LAP Supply Chain Business Loans

D
100.0% 100.0%
12% 12% 15% 14% 15% 15% 13% 13% 14%
20% 21% 24% 21% 21%
26% 23% 21%
80.0% 80.0%
31% 31% 30% 30% 29% 28% 29% 28% 27% 27%
60.0% 7% 7% 60.0%
9% 8% 8%
13% 12% 11% 10%
40.0% 40.0% 74% 77% 80% 79% 76% 79% 79%
20.0% 44% 45% 44% 45% 47% 49% 51% 53% 53% 20.0%
79%
0.0% 0.0% 73%
2Q23
3Q23
4Q23
2Q24
1Q24
2Q24
2Q2
3Q2
4Q2
1Q2
2Q2
3Q2
2Q2
3Q2
4Q2
1Q2
2
4
4Q2
1Q2
2
Exhibit 40. Consumer and personal loans mix Exhibit 41. Corporate/mid-market mix
Consumer Personal
Project Finance Construction Finance
Structured Finance TL/WCDL
100.0% 100.0%
20% 26% 23% 21% 21% 23% 21%
80.0%
18%
80.0% 30% 27% 28% 26% 28% 25% 26% 25%
23%
60.0% 60.0% 15% 19% 17% 17% 15% 19%
34% 5% 5%
8% 8% 5% 4%
40.0% 80% 77% 79% 79% 77% 79% 40.0% 13% 16%
82% 74%
20.0% 77% 20.0% 49% 47% 50% 52% 54% 52%
12%
0.0% 0.0% 8% 9% 10%
2Q23
3Q23
4Q23
1Q24
1Q23
3Q23
1Q24
1Q23
2Q23
4Q23
2Q24
2Q24
2Q22
46% 48% 48%

3Q22
4Q22
2Q22
3Q22
4Q22

Exhibit 42. Sourcing channels of secured and unsecured businesses

Secured Business Unsecured Business
5%
46%
35%
54%
60%
DSA Direct Sourcing DSA Digital Sources
Direct Sourcing
Most of the unsecured business loans are sourced digitally while secured business loans
are majorly done through direct branch visits and DSAs.
Fintech partnerships and aggressive branch expansion plans to support retail growth
The retail portfolio of the company accounts for 21% of total loans at INR 193bn (as of
2QFY24), it has grown at ~140% CAGR since the last 2 years, heavily contributed by fintech
sourcing partnerships. The portfolio constitutes 79% personal loans and 21% consumer loans.
Consumer loans are mainly BNPL/ check out financing with ATS of INR ~20k. ABFL has tie-ups
with ~20 fintechs and their commissions are performance linked, though the underwriting is
done mainly by ABFL. Further, based on the customer repayment behaviour, the company
offers them PL (personal loan); ~40% of the personal loans are to repeat consumer loan
customers. 55% of PL customers have a CIBIL score of at least 750. Although the company
plans to continue to increase its fintech sourcing partners for digital loans, it aims to not
increase its PL and consumer loans above 25% of the total portfolio.
Since ABCL’s ATS is higher than most of the retail focused NBFCs and it directly competes
with banks in these segments, especially MSME and business loans, the company has
aggressive expansion plans to improve its geographical reach in order to directly compete with
established players/banks. It has added 154 branches in last 12 months to reach a total of 375
branches in 2QFY24, and branch expansion is likely to continue with a target of 450-500
branches in FY24 and 700 branches in the next few years. 80% of these branches are focused
in tier-3/4 cities while the company remains well diversified with no major concentration in
specific states/regions. We expect the AUM to grow at 24% CAGR over FY23-25E while the
management targets to double its loan book in the next 3 years. We expect the share of SME
and retail loans to rise to 73% by FY25E.
400 0%
Exhibit 43. ABFL: AUM growth trend 3%
200 -10%
AUM (INR bn) YoY Growth (%) -9%
1,400 50% 0 -20%
1,239 FY20 FY21 FY22 FY23FY24E FY25E
1,200 40%
46%
997
1,000 30%
806
800 20%
487 24% 24%
600 471 552 10%
13%
500 60%
Exhibit 44. ABFL: Disbursements growth trend
400 24% 24% 40%
300 3% 240 20%
Disbursements (INR bn) YoY growth (%) 200 143 148 0%
100 -29% -20%
800 105% 757 120% 0 -40%
700 100% FY20 FY21 FY22 FY23 FY24E FY25E
609 Source: Company, JM Financial
600 63% 492 80%

Corporate book share to gradually decline to ~25% over the long term
The corporate portfolio growth for the company has also been healthy at 22% CAGR since
the last 2 years as compared to many NBFC peers who have been running down their
corporate book. The management plans to lower the share of corporate book to 25% of
total AUM (from 31% presently) with increased focus on retail loans while maintaining
quality growth from corporate loans. This allows the company to maintain a perfect
balance mix of secured:unsecured loans with varied products across different ticket sizes
and yields. We expect 16% CAGR growth in the corporate book while the rest of the book
is expected to grow at ~28% over FY23-25E, which will ultimately lower its corporate book
to ~27% by FY25E and 25% in the long term.
Exhibit 45. Corporate loans book growth
Corporate Loan Book (INR bn) %YoY

333
350 310 50%
289
300 40%
254 248
43.5% 237
30%
250 216
202
20%
200
22.6%
10%
150 15.4% 16.5% 15.4%
0%
100
-18.2% -10%
50 -6.8% -20%
-14.6%
0 -30%
FY20 FY21 FY22 FY23 FY24 FY23FY24E FY25E
Exhibit 46. Cautious growth on corporate book to reduce its share in overall book
Personal & Consumer Secured Business
Unsecured Business Corporate/Mid-Market
100%
31% 29% 27%
80% 37%
10% 11% 12%
60% 10%
40% 40% 38% 37%

44%
20%
19% 21% 24%
9%
0%
FY22 FY23 FY24E FY25E
Increasing focus on small ticket SME loans to aid margin expansion

Post 250bps repo rate hike from RBI, ABFL’s CoFs is already up ~140bps as of 2QFY24.
We expect the cost of funds to peak out in the next few quarters. The company also
enjoys strong parentage of Aditya Birla Group with AAA credit rating, which makes it
easier for it to borrow from the market at attractive rates. Yields, on the other hand, are
likely to improve as the company expands its products to small ticket size and moves
more towards unsecured loan segments. This is likely to aid in NIMs expansion over the
next couple of years. ABCL raised INR 30bn via QIP and preferential allotment largely to
be used for growth in the NBFC business, resulting in lower leverage levels and thus
benefiting CoFs. We estimate NIMs to expand 31bps over FY23-25E.
Exhibit 47. ABFL: Yields and cost of borrowings trend Exhibit 48. ABFL: Margins trend
Yield on loans Average cost of borrowings NIM (%) Spread (%)
14% 13.2% 13.3% 6.5% 6.0%
11.9% 6.0%
11.5% 5.7%
11.3% 6.0%
12% 10.8% 5.3%
5.5%
10%
5.0% 4.5%
8% 4.1%
8.2% 4.5%
7.8% 7.9% 4.9% 4.8%
6% 7.1% 4.0% 4.6%
6.6% 4.2%
6.2% 3.5%
4% 3.0%
FY20 FY21 FY22 FY23 FY24E FY25E 3.3%
2.5%
2.0%
1.5%
Exhibit 49. ABFL: NII CAGR of 33% over FY23-25E Exhibit 50. ABFL: Borrowings mix
NII (INR bn) YoY Growth (%) - RHS Bank loans Debentures CPs Sub debt
80.0 50%
43% 100%
40% 5% 5% 5% 3% 3% 3%
70.0 5% 8% 7% 9% 9% 9%
40% 80%
60.0 27% 24% 24% 24%
50.0 36% 32%
24% 24% 30% 60%
40.0
40%
20%
60% 63% 63% 63%
30.0
54% 54%
10%
20%
20.0 7%
10%
10.0 0%
21.1 22.7 28.2 39.5 56.4 69.8 FY20 FY21 FY22 FY23 FY24E FY25E
0.0 0% Source: Company, JM Financial
Exhibit 51. ABFL: Ratings summary

Instrument Rating
Short-term debt A1+ (ICRA, India Ratings, CARE)
Long-term debt AAA/Stable (ICRA, India Ratings, CARE)

Opex to remain range-bound due to tech-investments

ABFL recently integrated Udyog Plus to the Ultratech platform and is now in the process
of integrating it with Aditya Birla Group (ABG) platform. With continued tech
advancements towards Udyog plus and well established plan to grow its branches from
375 in 2QFY24 to 450-500 in FY24 and 700 in the medium term, opex is likely to remain
range-bound over the next 2 years. We forecast an avg. Opex/AUM of 1.9% over FY23-
25E while C/I ratio would also likely moderate to ~28.3% by FY25E.
Exhibit 52. ABFL: Opex/AAUM trend Exhibit 53. ABFL: Cost to income ratio trend
Opex/AAUM (%) Cost to Income
2.5%
2.1% 33%
2.0% 32.1%
2.0% 1.8% 1.8% 31.6%
1.7% 32%
1.4% 30.7%
1.5% 31%
30.0%
1.0%
30%
28.8%
0.5%
29% 28.3%
0.0% 28%
27%
26%
Recent capital-raise to increase capital adequacy

ABCL raised a total of INR 30bn including INR 12.5bn via preferential allotment to promoters
and INR 17.5bn via QIP. We assume that out of INR 30bn, INR 20bn will be utilised under
NBFC business (already infused INR 7.5bn in 2QFY24) and INR 5bn will be utilised under
housing business. The balance is likely to be infused into the rest of the businesses. This
increases ABFL’s capital adequacy to 17.9% in FY24E from current levels of 16% as of
1QFY24. We believe the current CAR is sufficient for the next 2 years of growth.
Exhibit 54. Capital infusion to increase CAR

Tier II (%) Tier I (%)
22.7%
24% 21.8%
19.1%
20% 17.9% 17.4%
16.4%
16%
12%
18.4% 18.1%
8%
15.2% 13.9% 15.3% 14.8%
4%
0%
Retail and SME credit performance to drive overall asset quality

Post the IL&FS crisis, all the NBFCs with major corporate exposures were recovering from
asset quality concerns while during the process, the stress book got further deteriorated
with Covid-led lockdowns taking stage-3 to the peak of 3.9% (during 3QFY22). The asset
quality remained range-bound for almost a year due to on-going changes related to
reclassification of stage-3 as per IRAC. However, the stage-3 started moving down
significantly in 4QFY23 and was 2.6% as of 2QFY24. The total stress book had peaked to
~11% in 3QFY22 but has since eased to ~5.2% as at 2QFY24 on the back of strong retail
focus and higher growth. We believe the strong growth will continue while the major shift
to retail book should play out in favour of the company given that 58% of the unsecured
business stage-3 is also backed by government schemes and 89% of the total customer
base has a credit score of 700+. Thus, we believe the key area to watch from here on is
how PL and consumer segment performs as most of the growth in the last couple of years
has been through PL and consumer loans and unsecured businesses.
Exhibit 55. ABFL: Gross stage 3 (%) and provision cover trend Exhibit 56. ABFL: Total stress book performance
Gross Stage 3 (%) Net Stage 3 (%) Gross Stage 2 (%) Gross Stage 3 (%)
4.5% 60%
41.5% 46.2% 48.0% 48.0% 50%
14.0%
4.0% 40% 11.4%
30% 12.0%
3.5% 39.5%
20% 9.0% 8.9%
3.0% 31.0%
10.0%
2.5% 10%
3.9% 8.1%
2.0% 0% 7.0%
1.5%
2.7%
3.6%
2.2%
2.9%
1.5%
9%3.
0%3.
7%1.
1%3.
7%1.
8%2.
5%1.
8.0%
3.6% 3.7% 5.8% 5.5% 5.2%
1.0%
3.1%
0.5%
6.0%
0.0%
3.6%
FY24E
FY25E
FY20
FY21
FY22
FY23
4.0% 7.5% 3.1% 2.8% 2.6%

5.4% 5.2% 5.0%
2.0%
3.4%
2.7% 2.6% 2.6%
0.0%
3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24
Exhibit 57. ABFL: Trend in credit costs (% of AUM) Exhibit 58. ABFL: Segmental gross stage 3 (%)
Credit cost (%) Personal & Consumer Unsecured business
Secured business Corporate / Mid market
1.8% 1.59%
1.6%
8%1.6%4.2.9%5.6%
6%
1.32%
0%2.7%2.4%
7%1.2%4.2
1.8%4.6%6%
1.8%5.1%2
8%1.3.8%
2.7%1%4.
2.0%7%2.2%
%2.5.0%
.8%3%5.
2.4.1%
2.2%5.
2.8%3.
1.28% 5%
5%3.
8%1.2.8%5.2%
1.4% 1.19% 1.23% 1.24%

1.2% 4%
1.0%
3%
0.8%
0.6% 2%
0.4% 1%
0.2%
0%
0.0%
FY25E
3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24

FY24E
FY20
FY21
FY22
FY23

PAT to grow at 38% CAGR with RoA/RoEs of 2.5%/17% by FY25E

We forecast net profit to post 38% CAGR over FY23-25E and expect RoA/RoE to improve to
2.5%/17% by FY25E (vs. 2.2%/14.6% in FY23) driven by: a) strong retail and SME growth,
b) margin expansion from high-yield products’ growth, c) steady opex with continued tech investments, d) stable asset quality on the back
of favourable credit environment, and e) low leverage.
Exhibit 59. ABFL: NII trend Exhibit 60. ABFL: PPoP trend
NII (INR bn) YoY Growth (%) - RHS PPoP (INR bn) YoY Growth (%) - RHS
80.0 50%
43% 60.0 50%
40% 40% 52.3
70.0 38%
40% 50.0 40%
60.0 41.3
50.0 27%
24% 24% 30% 25%
40.0 40.0 30%
20% 29.9
30.0 15%
10% 30.0 20%
20.0 7% 21.4
10% 17.6 17.1
10.0 20.0 10%
21.1 22.7 28.2 39.5 56.4 69.8 -3%
0.0 0% 10.0 0%
Source: Company, JM Financial 0.0 -10%
Exhibit 61. ABFL: PAT– Expect 38% CAGR over FY23-25E Exhibit 62. ABFL: Return ratios
PAT (INR bn) YoY Growth (%)
ROA (%) ROE (RHS) (%)
46.6% 50% 18%
44.2% 40% 16%
3.0%
35.0 30%
2.51% 14%
40.2% 20% 2.40%
30.0 12%
10% 2.5% 2.20%
30.5%
0% 2.06% 17.3% 10%
25.0
-10% 16.8% 8%
20.0 2.0%
-20% 6%
15.0 1.55% 1.50% 14.6%
-4.5% 1.5%
10.0 -7.3%
1.0% 11.9%
5.0 10.5%
8.0 7.7 11.1 15.5 22.8 29.7 0.5%
FY20
FY21
FY25
0.0 9.1%
FY24E
E
FY22
FY23
0.0%
FY24E
FY25E

FY20
FY21
FY22
FY23

Financial Tables (Standalone) – Aditya Birla Finance
Income Statement (INR mn) Balance Sheet (INR mn)

Y/E March FY21A FY22A FY23A FY24E FY25E Y/E March FY21A FY22A FY23A FY24E FY25E
Net Interest Income (NII) 22,683 28,213 39,463 56,435 69,818 Equity Capital
6,621 6,621 6,621 7,764 7,764
Non Interest Income 2,381 2,656 4,616 2,507 3,042 Reserves & Surplus
81,758 91,983 1,07,641 1,49,269 1,78,988
Total Income 25,064 30,869 44,080 58,942 72,860 Stock option outstanding
3,116 4,701 6,892 7,581 8,339
Operating Expenses 7,932 9,463 14,143 17,687 20,601 Borrowed Funds
4,12,152 4,59,857 7,07,707 8,84,634 11,05,793
Pre-provisioning Profits 17,132 21,406 29,937 41,254 52,259 Deferred tax liabilities
0 0 0 0 0
Loan-Loss Provisions 1,393 545 5,289 10,893 12,634 Preference Shares
3,905 6,529 12,367 8,136 10,087
Others Provisions 5,425 5,990 3,746 0 0 Current Liabilities & Provisions
0 0 0 0 0
Total Provisions 6,818 6,535 9,035 10,893 12,634 Total Liabilities
5,07,552 5,69,692 8,41,228 10,57,384 13,10,971
PBT 10,314 14,871 20,902 30,361 39,625 Net Advances
4,75,974 5,36,075 7,88,495 9,75,394 12,13,111
Tax 2,626 3,788 5,364 7,590 9,906 Investments
7,929 16,940 37,027 53,647 66,721
PAT (Pre-Extra ordinaries) 7,688 11,083 15,538 22,771 29,719 Cash & Bank Balances
15,301 6,925 3,876 9,754 12,131
Extra ordinaries (Net of Tax) 0 0 0 0 0 Loans and Advances
0 0 0 0 0
Reported Profits 7,688 11,083 15,538 22,771 29,719 Other Current Assets
3,009 4,086 3,402 7,841 5,934
Dividend 0 0 0 0 0 Fixed Assets
1,922 2,217 3,101 4,004 4,964
Retained Profits 7,688 11,083 15,538 22,771 29,719 Miscellaneous Expenditure
0 0 0 0 0
Source: Company, JM Financial Deferred Tax Assets
2,601 2,595 4,065 5,419 6,719
Total Assets
5,07,552 5,69,692 8,41,228 10,57,384 13,10,971

Key Ratios Dupont Analysis

Y/E March FY21A FY22A FY23A FY24E FY25E Y/E March FY21A FY22A FY23A FY24E FY25E
Growth (YoY) (%) NII / Assets 4.42% 5.24% 5.59% 5.94% 5.90%
Borrowed funds -5.1% 11.6% 53.9% 25.0% 25.0% Other Income / Assets 0.46% 0.49% 0.65% 0.26% 0.26%
Advances 3.5% 12.6% 47.1% 23.7% 24.4% Total Income / Assets 4.88% 5.73% 6.25% 6.21% 6.15%
Total Assets -2.3% 12.2% 47.7% 25.7% 24.0% Cost / Assets 1.54% 1.76% 2.00% 1.86% 1.74%
NII 7.5% 24.4% 39.9% 43.0% 23.7% PPP / Assets 3.34% 3.97% 4.24% 4.35% 4.41%
Non-interest Income -34.3% 11.5% 73.8% -45.7% 21.4% Provisions / Assets 1.33% 1.21% 1.28% 1.15% 1.07%
Operating Expenses 11.3% 19.3% 49.5% 25.1% 16.5% PBT / Assets 2.01% 2.76% 2.96% 3.20% 3.35%
Operating Profits -2.7% 24.9% 39.9% 37.8% 26.7% Tax rate 25.5% 25.5% 25.7% 25.0% 25.0%
Core Operating profit 2.9% 30.4% 39.2% 37.9% 26.7% ROA 1.50% 2.06% 2.20% 2.40% 2.51%
Provisions -3.6% -4.2% 38.3% 20.6% 16.0% Leverage 5.7 5.8 7.4 6.7 7.0
Reported PAT -4.5% 44.2% 40.2% 46.6% 30.5% ROE 9.1% 11.9% 14.6% 16.8% 17.3%
Yields / Margins (%) Source: Company, JM Financial

Interest Spread 3.32% 4.23% 4.63% 4.89% 4.84%
NIM 4.49% 5.33% 5.68% 6.04% 5.99%
Profitability (%) Valuations

ROA 1.50% 2.06% 2.20% 2.40% 2.51% Y/E March FY21A FY22A FY23A FY24E FY25E
ROE 9.1% 11.9% 14.6% 16.8% 17.3% Shares in Issue 662.1 662.1 662.1 776.4 776.4
Cost to Income 31.6% 30.7% 32.1% 30.0% 28.3% EPS (INR) 11.6 16.7 23.5 29.3 38.3
Asset quality (%) EPS (YoY) (%) -4.5% 44.2% 40.2% 25.0% 30.5%
Gross NPA 2.95% 3.60% 3.13% 2.89% 2.77% BV (INR) 133 149 173 202 241
LLP 1.23% 1.59% 1.28% 1.32% 1.24% BV (YoY) (%) 9.4% 11.6% 15.9% 17.2% 18.9%
Capital Adequacy (%) Source: Company, JM Financial

Tier I 18.43% 18.07% 13.92% 15.34% 14.76%
CAR 22.70% 21.77% 16.38% 17.89% 17.43%


Aditya Birla Housing Finance (HFC)

Diverse products portfolio ranging from prime to affordable
Aditya Birla Housing Finance Limited (ABHFL) had a diverse portfolio comprising Prime –
HL (33%), Prime – LAP (17%), Affordable – HL (34%), Affordable – LAP (7%) and CF
(9%) as of Sep’23. The prime loan book had an ATS of INR 5mn, while affordable housing
ATS is ~2.3mn which is on the higher side of the major affordable HFCs. ABHFL is set to
focus on both prime and affordable segments with ATS ranging from INR 2.5mn to INR
5mn. It aims to further harness the ABG ecosystem for growth (contributed 7% of
disbursements in 2QFY24), which should further aid strong growth, going forward. We
expect AUM growth of 20% CAGR over FY23-25E.
Exhibit 63. ABHFL: AUM growth trend Exhibit 64. ABHFL: Disbursements mix
AUM (INR bn) YoY Growth (%) 25% Disbursements (INR bn)
240
20% 90.0 78.2
20% 195
80.0
200 15%
65.2
163
10% 70.0
20%
60.0 53.0
160 136 5%
50.0
121 118 119
0% 37.2
120 14%
-5% 40.0
80 27.4
6%
30.0 FY25E
40
20.0
-3%
10.0
1%
0.0
FY24
0
FY25

E
Y
E
F
2
3
FY21
FY22
FY2

0
Exhibit 65. ABHFL: Trend in segmental mix
Prime HL LAP (Prime) Affordable Housing CF LAP (Affordable)

100%
5% 5% 6% 7% 7% 7% 7% 7% 7% 7%
5% 5%
90% 5% 6% 6% 6% 7% 8% 8% 9%
80%
24% 27%
29%
70% 31% 32% 34%
35% 34% 35% 34%
60%
24%
50% 24% 21%
20% 19% 18%
40% 17% 17% 17% 17%
30%
20% 42% 40% 38%
36% 35% 35% 34% 34% 33% 33%
10%
0%
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24

Branch expansion and opportunity to cross-sell

ABHFL plans to adopt a micro market penetration strategy for its sourcing. Consequently,
it continues to expand its branch network – 131 as on Sep’23 (from 74 branches in FY21),
which covers about ~85% of the total addressable market; ~70% of these branches are in
tier 3 and 4 cities. ABHFL is investing in digital reinvention to ensure seamless distributor
on-boarding and significantly reduce the customer turnaround time. As a result of these
investments in branch expansion and technology, ABHFL’s opex to AUM has continued to
increase over the last few years. However, we expect it to gradually moderate, going
ahead, as operating leverage benefits start accruing.
Exhibit 66. ABHFL: Sourcing mix Exhibit 67. ABHFL: Trend in branch count
Branches YoY Growth (%)
Direct DSA 70%
160 148
60%
138
128 50%
120 40%
120 30%
50%
74 20%
80 65 10%
0%
40
FY25E
0
FY24E
FY23
FY20
FY21
FY22
Exhibit 68. ABHFL: Opex/AAUM trend Exhibit 69. ABHFL: Cost to income trend
Opex/AAUM(%) Cost to Income
2.4%
2.5% 50% 46.1%
2.2% 2.2% 44.6%
43.4%
2.0%
41.9%
1.6%
45%
1.4% 1.4%
39.4%
1.5%
37.8%
1.0% 40%
35%
0.5% 30%
25%
0.0%
20%
15%
Source: Company, JM Financial 10%
5%
0%

Margins to moderate going ahead

ABHFL’s enjoys a strong parentage and thereby, AAA credit rating (ICRA and India
Ratings) enables low cost funding from banks. The borrowing from NHB further reduces
overall cost of funds for the company. Post the rate hikes, CoFs for the company
increased only 112bps, which was aided by increase in its share of NHB borrowings from
14% in FY22 to 21% as of 2QFY24. Yields have moved up 121bps since the rate hikes on
the back of focus on the affordable segment and higher floating rate asset mix. We believe
CoFs will inch up further from here, which will lead to slight moderation in margins, though
92% of the asset book is floating rate loans against only 63% floating rate liabilities.
Exhibit 70. ABHFL: Yields, CoFs trend Exhibit 71. ABHFL: Margins trend
Yield on loans Avg. CoFs NIM (AUM) (%)
11.5%
11.4% 6%
12% 4.7%
10.5% 10.7% 5%
10.3% 4.0%
9.9% 4%
10% 3.1%
8.5%
3% 2.6%
7.6% 7.5% 7.5%
2%
8%
6.5% 6.6% 1%
6%
0%
4% FY20 FY21 FY22 FY23
2%
Source: Company, JM
Financial
FY24E FY25E
4.9%
4.9%
Exhibit 72. ABHFL: Borrowings mix trend

Term Loan NHB NCD Others
100%
3%
8% 6%
10%
14% 22%
23%
80%
2% 24%
14%
18%
60%
21%
40%
76%
61%
53%
45%
20%
0%
FY21 FY22 FY23 2Q24

Robust asset quality

ABHFL’s gross NPLs peaked during Covid (3.7% as of 2QFY22) and has moderated
since then on the back of a) improved quality of origination, b) pre-delinquency
management, and c) in-house collections team supported by Fraud Control Unit and
analytics team. Stage 2 & 3 as of Sep’23 was 4.4% (vs. 8.1% in Sep’22).
ABHFL continues to enhance quality of origination with over 89% of the disbursement in
2QFY24 being to >700 CIBIL score customers (vs. 82% in 2QFY23). Meanwhile, the
share of new to credit customers has also fallen to 7% as of 2QFY24 (vs. 10% in
2QFY23). This gives further comfort to the asset quality of the company, which should not
result in any major hit on credit costs going forward, given the PCR on stage 3 also
remains strong at 33.9%, which is sufficient for a collateral-backed business. We have
estimated credit costs of ~40bps for FY24E and FY25E.
Exhibit 73. ABHFL: Trend in asset quality Exhibit 74. ABHFL: Stress book (stage 2+stage 3)
Gross Stage 3 (%) Net Stage 3 (%) PCR (RHS) (%) Stage 3 Stage 2
4.0% 40%
3.5% 35% 10.0%
3.0% 30% 10.0% 9.1%
2.5% 25% 8.7% 8.8%
9%0.
3%1.
3%3.
2%2.
9%2.
9%1.
1.3%
1.9%
3.5%
2.8%
2.7%
1.8%
8.1%
2.0% 20% 7.7%
1.5% 15% 8.0%
1.0% 10% 6.9%
0.5% 5% 6.0% 5.4% 5.3% 5.1% 5.0%
0.0% 0% 4.5% 4.1% 4.8%
FY24E
FY25E
FY20
FY21
FY22
FY23
4.4%
4.0% 1.8%
1.8%
2.0%
3.1% 3.7% 3.5% 3.7% 3.6% 3.7% 3.2%
2.7% 2.6%
0.0%
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
Exhibit 75. ABHFL: Credit costs trend

Credit cost (%)
1.0%
0.82%
0.8% 0.73%
0.59%
0.6%
0.48%
0.4% 0.43%
0.2%
0.0%
Y
Y
Y
Y
Y
F
F
F
F
F
FY20

Favourable CoFs and lower credit costs to aid healthy profitability metrics
Despite downward pressure on NIMs due to increasing cost of funds, we expect NII to grow by
~20% CAGR over FY23-25E led by ~20% CAGR growth in the loan book. Continued branch
expansion and investment in technology will keep opex higher in the near term. Robust asset
quality, on the other hand, will aid in benign credit costs. We expect earnings to grow by ~24%
over FY23-25E with RoA/RoE to reach 2%/12.7% by FY25E.
Exhibit 76. ABHFL: NII trend Exhibit 77. ABHFL: PPoP trend
NII (INR bn) YoY Growth (%) - RHS PPoP (INR bn) YoY Growth (%) - RHS
10.0 40% 6.0 5.4 80%
8.9 70%
9.0 5.0
7.4 4.1
8.0 27.4% 60%
7.0 6.2 67%
21.8% 4.0 3.6
20.5% 50%
6.0 19.6% 3.2
4.9 2.6
25.4% 3.0 40%
5.0 2.1
3.9 30%
4.0 3.2 2.0
3.0 30%
14.0% 20%
2.0 27%
1.0 1.0
0.0 0% 20%
FY20 FY21 FY22 FY23 FY24E FY25E 14% 10%
Source: Company, JM Financial 14%
0.0 0%
Exhibit 78. ABHFL: PAT to grow by 24% CAGR over FY23-25E Exhibit 79. ABHFL: Return ratios trend
PAT (in INR bn) YoY Growth (%) 50% ROA (%) ROE (RHS) (%)
16%
4.0 3.7 45%
3.5 40% 2.5%
2.8 35%
12.7% 12%
3.0 43.8% 30%
33.9%
25% 2.0% 12.2%
2.4
20% 11.8%
2.5 37.5% 15% 8%
13.1%
2.0 10%
1.5%
33.7% 5%
0% 9.5%
2.0 4%
8.0%
1.4
1.0%
1.5
1.0 22.1% 0.5%
1.0 0.8% 1.1% 1.6% 1.8% 1.8% 2.0%
15.1%
0.0%
FY25E
0.5
FY24E
FY20
FY21
FY22
FY23
FY23
FY24
FY21
FY20
FY22
FY25
0.0
E

E

Financial Tables (Standalone) – Aditya Birla Housing Finance

Income Statement Balance Sheet (INR mn)
Y/E March (INR mn)
Net Interest Income (NII) Y/E March FY21A FY22A FY23A FY24E FY25E
Non Interest Income
FY21A FY22A FY23A FY24E FY25E
Total Income
Equity Capital 5,012 5,012 5,012 7,012 7,012
Operating Expenses
3,853 4,907 6,156 7,365 8,874
Pre-provisioning Profits
Reserves & Surplus 10,180 12,198 14,668 20,440 24,152
Loan-Loss Provisions
Others Provisions 503 203 250 325 414
Total Provisions 4,356 5,111 6,406 7,690 9,288 Stock option outstanding 0 0 0 0 0
PBT Borrowed Funds 106,876 107,152 119,372 140,859 166,214
Tax 1,718 1,934 2,782 3,547 3,889
PAT (Pre-Extra ordinaries) 2,638 3,177 3,625 4,143 5,399 Deferred tax liabilities 0 0 0 0 0
Extra ordinaries (Net of Tax)
874 645 539 588 641 Preference Shares 0 0 0 0 0
Reported Profits
Current Liabilities & Provisions 1,690 1,545 1,669 4,316 5,061
Dividend
0 0 0 0 0
Retained Profits
Total Liabilities 123,758 125,907 140,721 172,627 202,439
874 645 539 588 641
Net Advances 118,026 118,955 135,570 162,800 195,444
1,764 2,533 3,085 3,554 4,758
Investments 0 0 0 0 0
391 560 676 782 1,047
Cash & Bank Balances 3,774 5,570 1,356 1,628 1,954

1,372 1,973 2,409 2,772 3,711
Loans and Advances 44 128 50 60 73

0 0 0 0 0
Other Current Assets 1,245 380 2,450 7,206 3,874

1,372 1,973 2,409 2,772 3,711
Fixed Assets 276 337 721 385 451

0 0 0 0 0
Miscellaneous Expenditure 0 0 0 0 0
1,372 1,973 2,409 2,772 3,711
Deferred Tax Assets 393 537 575 548 643

Total Assets 123,758
Dupont Analysis
Key Ratios
Y/E March FY21A FY22A FY23A FY24E FY25E
NII / Assets 3.02% 3.93% 4.62% 4.70% 4.73%
Growth (YoY) (%)
Other Income / Assets 0.39% 0.16% 0.19% 0.21% 0.22%

Borrowed funds -8.4% 0.3% 11.4% 18.0% 18.0%
Total Income / Assets 3.41% 4.09% 4.81% 4.91% 4.95%
Advances -2.6% 0.8% 14.0% 20.1% 20.1%
Cost / Assets 1.35% 1.55% 2.09% 2.26% 2.07%
Total Assets -6.0% 1.7% 11.8% 22.7% 17.3%
PPP / Assets 2.07% 2.55% 2.72% 2.64% 2.88%
NII 21.8% 27.4% 25.4% 19.6% 20.5%
Provisions / Assets 0.68% 0.52% 0.40% 0.38% 0.34%
Non-interest Income -12.9% -59.6% 23.1% 30.0% 27.3%
PBT / Assets 1.38% 2.03% 2.31% 2.27% 2.54%
Operating Expenses 3.0% 12.5% 43.9% 27.5% 9.6%
Tax rate 22.2% 22.1% 21.9% 22.0% 22.0%
Operating Profits 27.1% 20.4% 14.1% 14.3% 30.3%
ROA 1.07% 1.58% 1.81% 1.77% 1.98%
8.8 7.7 7.2 6.6 6.4
Core Operating profit 32.3% 23.3% 13.8% 14.3% 30.5%
Provisions 22.6% -26.2% -16.4% 9.1% 8.9% Leverage
ROE 9.5% 12.2% 13.1% 11.8% 12.7%
Reported PAT 33.7% 43.8% 22.1% 15.1% 33.9%
Yields / Margins (%)
Interest Spread 2.40% 3.13% 3.82% 3.85% 3.76%

NIM 3.12% 3.98% 4.71% 4.89% 4.90%
Valuations
Profitability (%)

ROA 1.07% 1.58% 1.81% 1.77% 1.98%
Shares in Issue 501.2 501.2 501.2 701.2 701.2
ROE 9.46% 12.18% 13.06% 11.76% 12.66%
EPS (INR) 2.7 3.9 4.8 4.0 5.3
Cost to Income 39.4% 37.8% 43.4% 46.1% 41.9%
EPS (YoY) (%) 33.7% 43.8% 22.1% -17.8% 33.9%
Asset quality (%)
BV (INR) 30 34 39 39 44
Gross NPA 1.94% 3.53% 3.25% 2.90% 2.66%
BV (YoY) (%) 9.9% 13.3% 14.4% -0.3% 13.5%
LLP 0.73% 0.82% 0.48% 0.43% 0.41%
Capital Adequacy (%)
Tier I 17.1% 19.4% 18.0% 21.6% 21.2%

CAR 21.7% 23.9% 21.6% 25.0% 24.5%

Aditya Birla Sun Life AMC – Regaining lost market share key
Aditya Birla Sun Life AMC (ABSL AMC) has seen muted CAGR of 2.7% over FY18-23
after strong growth in FY13-18 during which AUM grew at a CAGR of 28%. The primary
reason for this muted growth can be attributed to contraction in debt segment (CAGR -
10% over FY18-23) led by industry headwinds - outflows following a few large corporate
defaults, tax changes on debt funds, and issue with a large AMC. Even the equity
segment has seen subdued CAGR of 6% over FY18-23 (unlike the industry, which has
seen strong CAGR of 17%) – led by underperformance of key equity schemes. However,
we expect this prolonged period of underperformance to reverse, going ahead, and expect
ABSL AMC to clock in MF AUM CAGR of 15% over FY23-25E led by strong revival in the
equity segment (CAGR 20% over FY23-25E).
ABSL AMC used to be a predominantly debt-AUM-led AMC with 71% of AUM mix coming
from debt in FY13; that has now dropped to 24% in FY23, led by contraction/muted debt
AUM and steady growth in equity AUM. Incrementally, we expect proportion of Equity
AUM in AUM mix to continue inching up, while even others (ETFs+FOFs) are expected to
see some gains.
Exhibit 80. ABSL AMC: MF AUM growth Exhibit 81. ABSL AMC : Equity MF contribution has increased
Equity MFs Debt MFs Liquid MFs Equity MFs Debt MFs Liquid MFs Others (ETF + FoF)
Others (ETF + FoF) Total AUM YoY(%)
4,000 40% 100%
28% 3,476 16%
3,500 22% 23% 23%
23% 3,053 30% 27%
2,782 80% 23% 23% 22%
3,000
2,594 2,623 60% 47%
16% 38% 39% 27% 22% 21%
2,385 14% 20% 44% 24%
2,500 2,301 40%
2,024
7% 46% 47%
2,000 4% 10% 43% 43%
1,500 20% 37% 39% 38%
-6% 0% 33%
1,000
-15% 0%
500
0 -20%
Exhibit 82. ABSL AMC: Market share in overall MF AUM has declined
ABSL AMC NAM ICICI Pru AMC HDFC AMC SBI AMC UTI AMC
70%
60% 6.5% 6.3% 5.4% 5.8%
5.9% 5.9% 5.6%
9.6% 11.8%
50% 14.2%
15.7%
16.9% 17.6% 17.5%
40% 13.2% 14.1%
13.7%
12.7%
13.1% 11.0% 11.1% 11.2%
30%
13.4% 13.0% 12.7%
20% 12.3% 12.3% 12.4%
10.6%
9.3%
7.5%
10% 7.2% 7.4% 7.3% 7.6%
10.8% 10.1% 9.1% 8.4% 7.7% 6.7% 6.4%
0%
FY18 FY19 FY20 FY21 FY22 FY23 Sep23
Source: JM Financial # Calculated on the basis of monthly average AUM
ABSL AMC’s market share in overall MF AUMs has declined to 6.4% in Sep’23 from 10.8% in
Mar’18 primarily on account of contraction in market share in equity as well as debt MF
segments. ABSL AMC’s equity MF AUM market share has declined to 5.2% in Sep’23 from
9.2% in Mar’18 and, consequently, it is now the 7 th largest in terms of equity market share
(down from 3rd in Mar’18). Further, ABSL AMC’s MF AUM market share has moderated to
11.3% in Sep’23 from 13.5% in Mar’18 and it has lost its market leadership in the segment and
is now the 4th largest in terms of debt market share. The management has indicated that
it has taken steps to regain the lost market share in both equity and debt segments and
we remain watchful on this front. However, there is a continued belief that ABSL AMC will
benefit from cross-selling its products in the Aditya Birla ecosystem (One ABC strategy),
improving geographical presence (present in 290+ locations) and strong brand
positioning.
Exhibit 83. ABSL AMC: Equity MF market share declines Exhibit 84. ABSL AMC: Debt MF market share stable
ABSL AMC NAM ICICI Pru AMC HDFC AMC SBI AMC UTI AMC ABSL AMC NAM ICICI Pru AMC HDFC AMC SBI AMC UTI AMC
70%
80%
60% 4.8%
4.7% 70%
4.4% 7.6% 4.0% 3.8% 3.6%
7.9% 7.0% 4.3% 3.8%
8.9% 4.8% 4.5% 4.3% 60%
50% 4.8% 8.1% 9.7% 12.5% 14.0% 12.4% 13.6% 13.9%
9.7% 50%
10.2% 13.0%
12.0% 12.6% 12.9% 13.6% 13.8% 12.9%
16.2% 40% 13.2% 14.4% 12.9%
40% 15.6% 13.2%
14.4% 30% 13.1%
13.0% 15.3% 15.3% 15.7% 15.9% 16.8%
30% 11.4% 12.2% 12.6% 20% 12.2%
15.0% 10.5%
14.3% 7.0% 6.7% 7.7% 6.7% 7.4%
13.5% 10%
20% 12.5% 13.5% 12.5% 12.0% 11.6% 11.9% 11.6% 11.3%
12.4% 13.0% 12.9%
9.2% 8.9% 0%
10% 7.4% 6.9% FY18 FY19 FY20 FY21 FY22 FY23 Sep23
6.3% 6.4% 6.7% Source: Company, JM Financial #Calculated on the basis of monthly avg. AUM; Debt MF AUM
includes Infra debt funds and Gilt schemes, excludes liquid schemes
9.2%
8.8% 7.7% 7.2% 6.4% 5.5% 5.2%
0%
FY18 FY19 FY20 FY21 FY22 FY23 Sep23
Source: Company, JM Financial #Calculated on the basis of monthly avg. AUM; Equity MF AUM
includes ELSS, Balanced schemes
While ABSL AMC is at a disadvantage to other bank-led AMCs (who have access to large
branch network of their parent), it has been able to leverage the MFDs and national
distributors network for firing up its AUM growth. It has created a pan-India distribution
network consisting of 290+ branches, 85+ bank partners, 300+ national distributors,
76,300+ MFDs and 100+ digital partners with 19,000+ serviceable pin codes. MFDs
contributed 54% of the Equity AUM as of Sep’23, while banks and national distributors
accounted for 20% and 10% respectively.
Exhibit 85. ABSL AMC: Overall AUM distribution mix

Banks MFDs National Distributors Direct
100%
80% 45% 44% 41% 42%
60%
15% 15% 18% 17%
40%
31% 31% 32% 32%

20%
9% 10% 9% 9%
0%
Mar'21 Mar'22 Mar'23 Sep'23
60%
Exhibit 86. ABSL AMC: Equity AUM distribution mix
40% 51% 51% 54% 54%
Banks MFDs National Distributors Direct 20%
12% 13% 11% 10%

100%
0%
17% 18% 15% 16%
Mar'21 Mar'22 Mar'23 Sep'23
80%
20% 18% 20% 20% Source: Company, JM Financial
Muted MF AUM growth over the last few years has, in turn, impacted the topline revenue
for ABSL AMC. The impact was further compounded by moderation in equity to-line yields
as the proportion of new lower yielding flows is increasing vis-à-vis higher yielding stock
AUM. However, ABSL AMC has been able to protect its bottom line with PAT to Avg AUM
around 22-23bps and core PBT to Avg AUM at 24-25bps aided by operating leverage.
Going ahead, while we continue to expect equity yields to moderate, blended topline
yields should be broadly stable as the proportion of equity AUM in overall AUM is
expected to increase. This combined with return of growth in MF AUMs should help ABSL
AMC report healthy profitability metrics, going ahead. However, we remain watchful of the
key changes to the TER in the revised SEBI circular that is expected soon.

Exhibit 87. ABSL AMC: Revenue growth Exhibit 88. ABSL AMC: PAT growth
Revenue (INR mn) YoY (%) PAT (INR mn) YoY (%)
16,000 40% 8,000
14,000 7,000
30% 6,000
12,000 5,000
20%
4,000
10,000
3,000
8,000 10%
2,000
3,486
4,468
4,944
5,263
6,728
5,964
6,394
7,374
6,000
0%
1,000
12,491
13,268
11,597
10,679
12,930
12,266
12,932
14,887
4,000 0
2,000
0 -20%
Exhibit 89. ABSL AMC: Core PBT growth

Core PBT (INR mn) YoY (%)
10,000 60%
50%
8,000
40%
30%
6,000
20%
4,000
10%
0%
4,469
5,653
5,856
5,580
7,791
6,668
6,678
8,052
2,000
-10%
0 -20%
Source:
Company
, JM
Financial
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
Exhibit 90. ABSL AMC: Dupont analysis

As a % of Avg AUM FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Core Revenues / Avg. AUM 0.57% 0.53% 0.46% 0.48% 0.45% 0.46% 0.46%
Other Revenues / Avg. AUM 0.03% 0.03% 0.06% 0.04% 0.05% 0.07% 0.06%
Total Revenues / Avg. AUM 0.60% 0.56% 0.52% 0.52% 0.50% 0.52% 0.51%
Employee cost / Avg. AUM 0.12% 0.11% 0.10% 0.09% 0.10% 0.11% 0.11%
Brokerage / Avg. AUM 0.07% 0.03% 0.02% 0.02% 0.03% 0.03% 0.03%
Operating cost / Avg. AUM 0.33% 0.26% 0.22% 0.19% 0.21% 0.22% 0.21%
PBT / Avg. AUM 0.28% 0.30% 0.30% 0.33% 0.29% 0.30% 0.30%
PAT / Avg. AUM 0.19% 0.22% 0.23% 0.25% 0.22% 0.23% 0.23%
As a % of Balance sheet assets FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Core Revenues / Avg. Assets 87.1% 75.5% 60.1% 58.5% 47.0% 43.5% 44.1%
Other Revenues / Avg. Assets 5.3% 4.9% 7.8% 5.2% 4.9% 6.3% 5.4%
Total Revenues / Avg. Assets 92.3% 80.4% 67.8% 63.7% 51.8% 49.8% 49.5%
Employee cost / Avg. Assets 18.2% 15.8% 13.5% 11.5% 10.6% 10.7% 10.4%
Brokerage / Avg. Assets 10.7% 4.4% 2.9% 2.9% 2.8% 2.7% 2.6%
Operating cost / Avg. Assets 50.0% 37.4% 28.7% 23.3% 21.4% 21.0% 20.3%
PBT / Avg. Assets 42.4% 43.0% 39.1% 40.5% 30.4% 28.8% 29.2%
RoA (%) 29.3% 32.2% 29.6% 30.4% 22.8% 21.5% 21.9%
Avg Assets/Equity (x) 1.3 1.2 1.2 1.1 1.1 1.1 1.1
RoE (%) (RHS) 37.9% 39.0% 34.8% 34.5% 25.3% 23.9% 24.4%
Exhibit 91. ABSL AMC: Profitability and RoEs Exhibit 92. ABSL AMC: Core PBT / Avg AUM
Core PBT / Avg. AUM
PAT / Avg. AUM RoE (%) (RHS)
0.30% 45%
0.30%
39% 40%
38% 35% 0.25%
35% 34% 30%
0.20%
0.25% 33% 25%
20% 0.15%
0.20% 25% 24%
15%
24%
10% 0.10%
24%0.
29%0.
25%0.
0.21%
0.24%
0.27%
0.25%
0.24%
0.15% 5%
0.10% 0%
0.05%
22%0.
19%0.
25%0.
23%0.
0.17%
0.23%
0.22%
0.23%
0.05% 0.00%
0.00% FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E Source: Company, JM Financial
Aditya Birla Sun Life AMC – Fund performance

As shown in exhibit below, most of Birla SL AMC’s equity MF schemes have
underperformed the relevant benchmarks over a 1-3-5 year period, which in turn, has
impacted the equity market share of ABSL AMC.
Exhibit 93. ABSL AMC: Equity + Balanced scheme performance (as of 27 th Oct’23)
ABSL AMC - Equity + Balanced MF AUM Regular Scheme returns Benchmark returns
Benchmark
performance (INR bn) 1 year 3 year 5 year 1 year 3 year 5 year

Aditya Birla Sun Life Frontline Equity Fund 230 NIFTY 100 Total Return Index 9.40% 19.35% 13.88% 6.61% 17.97% 14.47%
Aditya Birla Sun Life Equity Advantage Fund 50 NIFTY Large Midcap 250 Total Return Index 9.48% 16.67% 13.46% 15.11% 24.70% 17.97%
Aditya Birla Sun Life Multi-Cap Fund 44 Nifty 500 Multicap 50:25:25 Total Return Index 13.00% NA NA 16.32% NA NA
Aditya Birla Sun Life Mid Cap Fund 43 NIFTY Midcap 150 Total Return Index 17.93% 26.84% 15.86% 23.81% 31.48% 21.36%
Aditya Birla Sun Life Small Cap Fund 46 S&P BSE 250 SmallCap Total Return Index 23.17% 28.16% 15.61% 27.82% 34.17% 20.70%
Aditya Birla Sun Life Pure Value Fund 47 NIFTY 500 Total Return Index 24.90% 26.67% 13.17% 10.94% 21.10% 16.01%
Aditya Birla Sun Life ELSS Tax Relief 96 Fund 136 NIFTY 500 Total Return Index 6.55% 10.54% 9.10% 10.94% 21.10% 16.01%
Aditya Birla Sun Life Dividend Yield Fund 10 NIFTY 500 Total Return Index 20.77% 24.50% 16.07% 10.94% 21.10% 16.01%
Aditya Birla Sun Life Focused Fund 60 NIFTY 500 Total Return Index 8.49% 17.46% 13.76% 10.94% 21.10% 16.01%
Aditya Birla Sun Life Flexi Cap Fund 171 NIFTY 500 Total Return Index 10.15% 18.82% 14.27% 10.94% 21.10% 16.01%
Aditya Birla Sun Life Equity Hybrid '95 Fund 69 CRISIL Hybrid 35+65 Aggressive Index 8.74% 15.43% 10.73% 8.54% 14.56% 13.38%
Aditya Birla Sun Life Regular Savings Fund 15 CRISIL Hybrid 85+15 Conservative Index 6.48% 10.83% 6.48% 7.56% 6.54% 7.56%
Aditya Birla Sun Life Equity Savings Fund 5 NIFTY Equity Savings Total Return Index 8.55% 9.47% 8.44% 7.95% 9.86% 9.57%
Aditya Birla Sun Life Balanced Advantage Fund 67 CRISIL Hybrid 50+50 Moderate Index 9.14% 12.79% 10.48% 8.28% 12.15% 12.18%
Total of above funds' AUM 991
Above funds as % of ABSL AMC’s Equity +

76%
Balanced MF AUM
Source: AMFI, JM Financial
Aditya Birla Sun Life Insurance – steady RoEVs of 15%

going ahead
Aditya Birla Sun Life Insurance (ABSL)’s APE posted 23% CAGR over FY18-23 led by
increasing proportion of non-par savings and higher share of banca channel contribution
(particular driven by HDFC Bank). It reported its highest-ever NBV margin post-overrun of
23.2% in FY23 on the back of a steep increase in the share of high margin non-par products.
Over the last few years, ABSL’s growth in APE and NBV has been driven by a) scaling up of
banca partnerships, whose contribution increased to 56% of individual new business in FY23
vs. 10% in FY17, b) share of non-par jumping to 74% in FY23 vs. 43% in FY17, and c) 13-month
persistency improving to 87.5% in FY18 vs. 71.2% in FY17. Going forward, we expect APE to
grow at 14% over FY23-25E. However, NBV margin is expected to normalise to 14-15% with the
expected slowdown in non-par contribution. We forecast RoEV of 15% over FY23-25E. We
value BSL at 1.8x FY25EV, implying value of INR 222bn.
 APE growth aided by strong non-par in FY23: APE growth for FY23 was 36% much higher than private players and industry at
+24% and +19% YoY respectively, leading to an increase in its market share to 4.7% (+40bps YoY) among private peers and 2.7%
(+30bps YoY) in the industry. However, a large portion of the growth was driven by non-par segments wherein incremental demand will
be impacted by revised tax regulations. We expect ABSL to grow at 14% CAGR over FY23-25E.
 Product mix shifts in favour of ULIPs and protection: While a large proportion of growth was being driven by non-par segments
over the last few years, we expect incremental growth to be driven by protection and ULIP segment, going ahead. Proportion of traditional
products increased to 81% in FY23 (vs. 61% in FY22) with growth being driven by non-par (proportion increased to 74% vs. 58% YoY).
However, share of ULIPs declined to 17% (vs. 34% in FY22) while even protection contracted to 2% vs. 5.5% YoY. Going ahead, the
management intends to have a balanced product mix with focus on high-margin protection products though proportion of non-par is
expected to moderate.
 Banca partnerships scaling up; even direct contribution increasing: The contribution of the bancassurance channel (as a % of individual
NBPs) increased from 10% in FY17 to 56% in FY23 as the partnership with HDFC Bank scaled up, with ABSL getting access to all branches of
the bank starting Apr’18. However, we remain watchful of the incremental distribution strategy of the bank given HDFC Life’s wallet share is
increasing.
However, the management has indicated that the size of HDFC Bank opportunity is
too large to make any impact on ABSL’s business. Agency channel contribution has
moderated to 33% in FY23 vs. 74% in FY17. Further, even the share of the direct
channel has improved to 10% in FY23.
 Improvement in persistency; cost ratios to be monitored: Operating expense ratio (ex-commissions) inched up to 14% in FY23
vs. 13% in FY22. Further, even the commission ratio increased to 6% vs. 5% YoY. We remain watchful of the incremental trend in opex
and commission ratios with the removal of specific product-wise caps. However, 13-month and 61-month persistency ratio improved to
87.5% (vs. 84.6% in FY22) and 54.3% (vs. 54.3% in FY22) respectively.
 Highest ever NBV margins reported in FY23; though it is expected to normalise going ahead: ABSL reported its highest-ever
post overrun margins of 22.6% in FY23 on the back of a steep increase in the share of high margin non-par products. However, with the
expected slowdown in non-par contribution, we expect NBV margin to normalise to 14-15% levels going ahead.
 Embedded value expanded to INR 90bn in FY23: ABSL reported EV of INR 90bn in FY23, +18.5% YoY driven by the 1.2x YoY
increase in new business value to INR 8bn.
 RoEV to improve to 22.6% in FY23: Being an agency dominated channel, ABSL's RoEV has remained significantly lower than those
of bank-promoted insurers. However, with the increase in share of higher-margin products, ABSL has been able to report higher NBV and
RoEV.

Aditya Birla Sun Life Insurance – key charts

Exhibit 94. ABSL: APE growth trend Exhibit 95. ABSL: Market share
Exhibit 96. ABSL: Operating cost mix Exhibit 97. ABSL: Trend in operating expense
35%
30% 24,000 35% 40%
25% 30%
20,000 30%
20% 4%
6% 16,000 14% 20%
4% 6% 14%
5% 6% 6% 7%
15% 5% 12,000 3% 4% 10%
10% 8,000 0%
18% -13%
16% 4,000 -10%
15% 14% 15% 14% 13% 14%
5% 0 -20%
FY22
FY23
FY16
FY17
FY18
FY19
FY20
FY21
0%
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY
23
Operating expense (`mn) Growth

Commisions/GPW Opex (ex commisions)/GPW
Exhibit 98. ABSL: Trend in conservation ratio Exhibit 99. ABSL: Trend in persistency ratio
100% 100%
89% 87%
90% 85% 84% 85%
80% 78% 83%
80% 80% 75%
77% 71%
80% 65%
83% 60%
51% 52%
70% 65% 42% 45% 49% 54%
40% 47%
57% 35%
60%
20%
50%
0%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
40%
Conservation ratio
13m persitency 61m persistency

Exhibit 100. ABSL: APE – traditional vs. linked Exhibit 101. ABSL: APE – product mix
100%
19% 100%
32% 31% 15% 12% 11% 10% 10% 13% 12%
80% 40% 40% 37% 35% 34% 18% 1% 1% 3%
2% 3% 3%
60% 3%
25% 43% 80% 3%
74%
40% 39% 42% 48% 59% 60%
58%
88% 89% 87%
20% 40% 79% 82% 85% 85% 85%
35%
20%
25%
21% 21%
18% 0%
10% 8% 7% FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
0% Life Pension Group Health
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Source: Company, JM Financial
Par Non-Par Linked
Exhibit 103. ABSL: Solvency ratio (%)
Exhibit 102. ABSL: Individual premiums by distribution channels 220% 211% 214%
200% 198%
200% 188%
178% 180%
173%
180%
160%
140%
120%
100%
Solvency margin

Exhibit 104. ABSL: NBAP margins post-cost overruns
25%
23% Exhibit 105. ABSL: RoEV and EV trends
20%
140.0 23% 24%
15% 15%
120.0 21%
14%
15% 15% 15% 18%
15%
100.0
11%
13% 14% 15%
10%
15%
10%
80.0
7%
12%
5% 60.0
9%
0% 40.0
FY19FY20FY21FY22 FY23 FY24e FY25e 6%
104
90
121
52
49
64
76

20.0 3%
0.0 0%
FY24e
FY23
FY25e
FY20
FY19
FY21
FY22
EV (INR bn) (LHS) ROEV (%) (RHS)

Aditya Birla Health Insurance – retail focus driving performance

Aditya Birla Health (ABHI) Insurance commenced operations in Oct’16 and became the 6 th
standalone insurer in the Indian non-life insurance space. It started as a JV (51:49)
between ABCL and MMI Holdings, a diversified financial services firm based out of South
Africa with experience in “Incentivised Wellness”, technical and product capabilities in
chronic care. During FY23, ABHI completed a preferential allotment of 9.99% to Abu
Dhabi Investment Authority for INR 6.6bn post which shareholding of ABCL, MMI and
ADIA stood at 45.9%, 44.1% and 9.99%, respectively.
In FY23, ABHI experienced substantial GWP growth of 57% YoY against SAHI (standalone
health insurers) growth rate of 26% YoY and diversified players' growth rate of 20% YoY. Its
GWP stood at INR 27.2bn with retail (including rural) contributing 59% and wholesale
contributing 41%. In FY23, ABHI experienced a substantial increase of 35% in its agent network
of total 85,000 agents and it also expanded its sales force from 3,000 to 4,000 to maintain a
strong sales presence. This expansion was facilitated through the "One ABC branch expansion
programme". It has partnerships with 15 private banks and two public sector banks in the
bancassurance channel and continues to further strengthen this channel. In the group
insurance segment, the company focuses on writing medium-sized business policies bundled
with cross-sell and upsell opportunities to actively seek existing clients.
The combined ratio of the company declined significantly from 150% in FY19 to 110% in
FY23. It aims to reach 100% by FY26.
Exhibit 106. ABHI: Trend in gross written premium with split in Exhibit 107. ABHI: Distribution mix – based on retail GWP
retail and group Proprietary CA/Brokers Banks Digital
Retail and rural Group 100%
30,000 11%
27,170 15%
25,000 80%
41% 37%
20,000 33%
17,270 60%
15,000 13,010 23%

18% 40% 24% 25%
8,720
10,000 20%
27% 27%
59%
28% 0%
4,970 77% FY22 FY23
5,000 82% Source: Company, JM Financial

35%
72%
65%
0
Source: Company, JM Financial; INR mn

Exhibit 108. ABHI: Trend in lives covered Exhibit 109. ABHI: Trend in market share in health segment
Lives Covered (mn)
Market share among SAHIs Market share among Industry
25
12%
10.4%
20
10%
8.3% 8.3%
15
8% 7.3%
21 6%
10 4.4%
19 4%
13 2.8%
5 2.0% 2.1%
8 2% 1.5%
0.9%
2
0 0%

Exhibit 110. ABHI: Combined ratio on an improving trend Exhibit 111. ABHI: Loss trend over the years
Claims Ratio Combined Ratio
Loss after Tax (INR mn)
160% 0
149%
134%
140%
-500
126%
120%
120% 110%
-1,000 (1,990)
(2,200)
(2,460)
100% (2,570)
-1,500
(3,110)
80% 72% 70%
65%
59% 59% -2,000
60%
-2,500
40%
-3,000
20%
0% -3,500

Other Businesses
Aditya Birla Money Ltd (ABML)
 Aditya Birla Money is a listed company engaged in the business of securities broking. It offers a wide range of solutions, including
broking, PMS, depository and e-insurance repository solutions, and distribution of other financial products. It’s subsidiary – Aditya Birla
Commodities Broking Limited (ABCBL) – is engaged in the business of commodities broking. The company has a a pan India network of
31 branches and 1,000+ franchisee outlets. ABCL holds 74% of share capital at ABML and the remaining is held by the public.
Aditya Birla Insurance Brokers Ltd (ABIBL)

 The company provides general insurance broking and risk advisory solutions to companies and individuals. ABCL holds 50.01% of its share
capital and the remaining is held by Infocyber India Pvt Ltd. ABIBL is among the leading intermediary in the general insurance industry has a
market share of ~3% (of premium). It is present in both retail and corporate segments, where it provides solutions for a vast array of products
including motor, travel, health and personal accident insurance within retail. On the corporate side, it provides project, property, speciality, liability
and employee benefit insurance.
Aditya Birla PE Advisors Ltd (ABPE)

 Aditya Birla PE Advisors Private Limited provides financial advisory and management services, focusing on managing venture capital funds
and alternative investment funds. ABPE is appointed as an investment manager to two SEBI-registered domestic venture capital funds – Aditya
Birla Private Equity - Fund I and Aditya Birla Private Equity – Sunrise Fund – under which it manages gross AUM of INR 11.6bn as of Mar’23.
Aditya Birla ARC

 Aditya Birla ARC is another subsidiary of ABCL that was incorporated in Mar’17. It is a joint venture with Värde Partners of the US to capitalise
on the large opportunity in the distressed assets space, especially in the mid-corporate segment. On receipt of necessary approvals, both parties
will jointly own and control the platform, which will leverage
ABCL’s expertise in the financial services domain, the ABG’s wide operational
experience across sectors and Värde’s established capabilities in global credit and
value investing strategies.

Management Team
Experienced management team with diverse exposure in financial services
ABCL’s management team – led by Ms. Vishakha Mulye – is well-supported by highly
experienced professionals with an average experience of 20+ years in the financial
services domain. They have in-depth industry knowledge and experience in top banks,
NBFCs, rating agencies, insurance companies, AMCs and Big 4 accounting firms. Many
have held senior positions at leading banks and financial services companies such as
Poonawalla Group, ICICI Merchant Services, ICICI Securities, Standard Chartered Bank
and Birla Sun Life Asset Management Company.
Exhibit 112. Key Management Personnel

Sr No. Team Designation Description
A chartered accountant and a career banker with over 3 decades of track record in driving large-
scale, long-term profitable businesses, Vishakha held significant leadership roles and led several
strategic initiatives, as a part of the ICICI Group. Prior to joining Aditya Birla Capital, she was the
Executive Director at ICICI Bank, overseeing their domestic and international Wholesale Banking,
1 Vishakha Mulye Chief Executive Officer, Aditya Birla Capital
Proprietary Trading, Markets and Transaction Banking Group. During her long career span, she
also served as the Group CFO of the ICICI Bank and was on the Board of ICICI Lombard General
Insurance Company, served as the MD and CEO of ICICI Venture Funds Management Company,
and chaired the Board of ICICI Bank, Canada.
He holds a degree in Engineering and is a Management graduate. As an integral part of the

Banking & Financial Services industry, his experience has been shaped over a career spanning 25
years. In his previous role as the Managing Director & CEO – Retail at Kotak Securities Limited,
Kamlesh was responsible for planning and executing strategic initiatives. He was instrumental in
driving the growth and strategy for Secondary Markets, Primary Markets, Margin funding and
Managing Director and Chief Executive Officer,
2 Kamlesh Rao distribution of Investment products. Prior to joining Kotak Securities Limited, Kamlesh held
Aditya Birla Sun Life Insurance
various roles at Kotak Mahindra Bank Limited over the course of 19 years. His experience spans
across the asset and liability portfolios, including retail lending, business loans, unsecured loans,
mortgages, SME lending, HNI banking and broking. He joined the bank as a Management
Trainee and rapidly rose through the ranks to become the Managing Director & CEO – Retail at
Kotak Securities Limited.
Rakesh has attended advanced management programs at Harvard Business School and the Indian
Institute of Management, Kolkata, and holds a post-graduation degree in International Relations.
Before joining ABFL, Rakesh spent 16 years with Standard Chartered Bank. He was the Head of
Mortgages Business, India, and his last assignment with Standard Chartered Bank was as General
Managing Director and CEO, Aditya Birla Finance Manager & Head SME Banking, India and South Asia.
3 Rakesh Singh
Ltd He also serves as a Director on the Aditya Birla Housing Finance Limited board. Rakesh has been
part of the Aditya Birla Group since 2011 and has played a crucial role in driving the growth
trajectory of both NBFC and Housing Finance businesses. He has more than 27 years of
experience in the financial services industry, cutting across Banking and Non-Banking financial
institutions.
Pankaj is a MBA from Savitribai Phule Pune University and holds a diploma in foreign trade from
the Department of Economics. Pankaj has diverse experience spanning over 25 years, having
handled multiple roles in areas of banking and finance. Before joining Aditya Birla Capital, Pankaj
Managing Director and Chief Executive Officer, worked for 19 years at ICICI Bank, in the areas of Retail Assets & Liabilities, Business Banking,
4 Pankaj Gadgil
Aditya Birla Housing Finance Limited SMEs, Payments, and large ecosystems. He is credited with several ‘industry first’ digital
propositions, like InstaBIZ, Connected & API Banking, Trade Online, Eazypay & InstaOD etc. These
digital propositions have won the bank several domestic and international awards, accredited by
Asian Banker, Gartner Innovation, IBA, Business Today, etc.
A qualified chartered accountant with 27 years of diversified experience, Pinky Mehta has been a
part of the Aditya Birla Group since 1991 and was its first woman officer. In her role as the Chief
Financial Officer, Aditya Birla Capital Limited, Pinky is responsible for Finance, Accounts, Banking,
Secretarial, Taxation and MIS, including the ongoing development & monitoring of control
5 Pinky Mehta Chief Financial Officer systems and reporting of financial performance. Prior to joining Aditya Birla Capital, she was the
Chief Financial Officer of ABNL where she was instrumental in the demerger of Madura
Garments to Pantaloons Fashion & Retail Limited. She has played a strong supporting role in the
merger of ABNL with Grasim and has taken many complex parts of this process to closure,
followed by the subsequent listing of Aditya Birla Capital Limited.

Having worked with large global banks for 25 years, Mukesh brings rich experience from very
diverse leadership roles in business, operations, technology, customer service, finance, client
analytics, human resources & financial modelling in the consumer and corporate banking
space.Mukesh is a Chartered Accountant and an alumnus of Shri Ram College of Commerce,
Delhi. Prior to joining the Aditya Birla Group, Mukesh worked with Citibank for 10 years. As
6 Mukesh Malik Chief Operating Officer
Managing Director, he steered Citi’s Operations, Customer Service and Technology organization
in South Asia. He also headed Citi’s global delivery centres in India, including Chennai which was
established and grown significantly under his leadership. During his stint with ABN AMRO Bank
(1999 – 2006), he headed it’s Retail Bank (West), Service and Business Solutions. In his last
assignment, he was Country Operations Head across all its businesses.
Tushar holds a Bachelor of Law from the University of Mumbai and has been a member of the
Institute of Chartered Accountants of India since 1988. At ABFL, he spearheads Large & Mid-
corporate lending, providing customised project finance, structured finance solutions, and
Chief Executive Officer, Infrastructure & Structured general corporate lending. At Aditya Birla ARC, he is responsible for the stressed assets/special
7 Tushar Shah
Finance, Aditya Birla Finance Limited situations platform set up in partnership with Varde Partners and mentoring this business's
growth and strategic initiatives. As a Director of the board in Aditya Birla Money Ltd, his role
involves mentoring the equity and debt stockbroking business. In addition, he oversees and leads
the expansion and strategic initiatives of all three businesses.
He has done his BSc in Mathematics and MBA, apart from being an Alumnus of IIM Bangalore
and Harvard through Advanced Management Programme. He brings with him over 26 years of
experience in the Mutual Fund industry as Portfolio Manager both in Fixed Income and Equity.
Prior to assuming the role of the CEO in 2009, Bala served as Chief Investment Officer from
Managing Director and Chief Executive Officer, 2006-2009.
8 A. Balasubramanian
Aditya Birla Sun Life AMC Limited As MD & CEO, Bala currently oversees nearly US$ 36 billion (as of December 31, 2019) Assets
Under Management at Aditya Birla Sun Life AMC which is one of the leading Asset Managers in
India. He also oversees global mandates through its subsidiary company in Singapore and Dubai,
having assets of close to USD 1.8 billion (as of December 31, 2019), apart from overseeing
Alternate Investment Funds, Real Estate and PMS.
Mayank is Fellow member of the Institute of Chartered Accountants of India (ICAI), the Institute
of Cost & Works Accountants of India (ICWA) and the Institute of Company Secretaries of India
(ICSI). He is also engaged with several bodies, including the CII Sub-Committee on Accessibility
Chief Executive Officer, Aditya Birla Health Health Insurance, the FICCI Committee on Health Insurance and the Internet and Mobile
9 Mayank Bathwal
Insurance Company Association of India’s (IAMAI) HealthTech Committee. Mayank has a rich experience of nearly 24
years in the industry. He joined the Aditya Birla Group in early 1994 and has worked closely in
various units and projects of the group including fertilizer and copper smelting units, financial
services business and power projects.
Ramesh holds a dual degree from the Birla Institute of Technology and Science (BITS), Pilani, India
and MBA in Strategy from the Nanyang Business School, Singapore. Ramesh started his career
working for the Citibank Global Cards Convergence Program and subsequently has held
leadership roles in Standard Chartered Bank as their Global Head of Technology Solution Delivery
10 Ramesh Narayanaswamy Chief Technology officer of Aditya Birla capital
for Retail bank; Group Chief Information Officer at the Singapore Post Limited, Group Chief
Technology and Operations Officer at CIMB Bank Berhad. Prior to joining Aditya Birla Capital, he
was the Director for Asia for High-Tech Payment Systems, an innovative payments company
where he helped them setup and build the Asia business and delivery teams.
Sandeep is a Doctor by profession and holds a MBBS degree. He has a total work experience of al
charitable community initiatives through an NGO and a renowned rural tertiary care hospital. He jo
Chief Executive Officer and Principal Officer,
11 Dr. Sandeep Dadia company has grown significantly on all key business parameters. He has strategically steered the c
Aditya Birla Insurance Brokers Limited
country. Prior to ABIBL, he was the Principal Officer at Enam Insurance Brokers Pvt. Ltd. He was th
greater heights. He has also worked with one of the most renowned TPAs (Third Party Administrat

Share-holding pattern
Grasim is the majority shareholder and directly owns 52.8% of ABCL's equity shares, with
another 16.3% owned by other promoters and the promoter group. ABCL also benefits
from being a part of ABG.
Exhibit 113. Shareholding pattern
Individual,
12.30%
DII, 8.24%
FII, 10.46%
Promotor
group,
69.00%

SOTP Valuations
Value ABCL at INR 220 per share
 We value ABCL at INR 220 per share, as per SOTP-based valuation given the diversified financial service segments of the company split
across NBFC lending, housing, AMC, Life Insurance, Health Insurance, AB Money, etc. We have valued each entity basis its nature of business.
The valuation of the individual entities are as follows:
- Aditya Birla Finance: We value ABFL at 2.0x FY25E P/B in return for 2.5%/17.3
RoA/RoE for FY25E implying a valuation of INR 375bn basis: a) diversified loan
book, b) strong traction in retail and SME loans, c) strong parentage of Aditya Birla
Group, d) high yielding unsecured book, and e) robust asset quality.
- Aditya Birla Housing Finance: We value ABHFL at 2.0x FY25E P/B in return for
2.5%/17.3 RoA/RoE for FY25E implying a valuation of INR 62bn basis: a)
diversified loan book across prime and affordable, b) support from NHB borrowings
and AAA ratings, and c) superior credit profile with 89% of customers having CIBIL
score above 700.
- Aditya Birla SunLife Insurance: Being an agency dominated channel, ABSL's RoEV has remained significantly lower than those of bank-
promoted insurers. However, with the increase in share of higher margin products, ABSL has been able to report higher NBV and RoEV. We value
ABSL at 1.8x FY25E EV, implying a value of INR 222bn.
- Aditya Birla SunLife AMC: We value ABSLSL AMC using 2-stage Gordon Growth Model with assumptions as shown below.
Based on our assumptions ABSL AMC is valued at 25x FY25E PAT to arrive at a fair value of INR 184bn.
- Aditya Birla SunLife Health Insurance: We value ABHI at 1.8x FY23 invested
capital, valuing the entity at INR 18bn.
- Aditya Birla Money Market: We value AB Money Market at current market cap.
We have applied a 15% holding company discount on: i) NBFC business (considering it
gets listed before FY25 due to RBI guidance on listing of NBFCs`-UL) ii) listed entities and
iii) partly owned entities.
Exhibit 114. SOTP valuation
Aditya Birla Capital SOTP Holding Valuation HoldCo Value Contribution
(%) Methodology Discount Per Share to TP (%)

Aditya Birla Finance 100.0% 2.0x FY25E P/B 15% 123 56%
Aditya Birla Housing Finance 100.0% 2.0x FY25E P/B 24 11%
Aditya Birla SunLife Insurance 51.0% 1.8x FY25E P/EV 15% 37 17%
Aditya Birla SunLife AMC (listed) 50.0% 25x FY25E P/E 15% 30 14%
Aditya Birla Money (listed) 73.6% Current Market Cap 15% 1 1%
Others (Health Insr, PE, Insurance Brokers) 15% 4 2%
Total 220 100%

Key risks
a) Volatility in interest rates: Being a wholesale funded institution, any sustained liquidity shock could impact ABCL's spreads
adversely and affect profitability.
b) Pressure on margins due to increased competition: Increasing competition – especially in segments such as housing and LAP
– could exert pressure on the company's yields and margins.
c) Large exposure in corporate book: ABCL has a large exposure in its corporate book, with large and mid-sized corporates
accounting for 30% of the overall book.
d) Life Insurance industry risk: a) Increase in tax rate from current levels would adversely impact EV and margins and b) any further change
in regulations with respect to life insurance premium tax benefits could adversely impact the industry including ABSL.
e) AMC risk: i) Fund performance: Consecutive negative or underperformance by various schemes or the market at large may lead to
outflows from AUM, thereby adversely impacting the business, ii) Competitive pressures: Competition from existing and new market participants
offering investment products could reduce ABSL AMC’s market share or put downward pressure on fees, iii) Regulatory Risk on TER: Further
reductions in prescribed TER limits may reduce ABSL AMC’s revenues and profits and may cause a decrease in general marketing efforts on
behalf of its funds, which could adversely affect AUM and overall demand for services offered by ABSL AUM.

History of Recommendation and Target Price Recommendation History

Date Recommendation Target Price % Chg.
5-Feb-20 Buy 110
7-Nov-20 Buy 110 0.0
22-Feb-21 Buy 130 18.2

APPENDIX I
JM Financial Institutional Securities Limited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd. and National Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst - INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +91 22 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: sahil.salastekar@jmfl.com
Grievance officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: instcompliance@jmfl.com
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 10% for stocks with market capitalisation in excess of INR 200 billion and REITs* and more than
15% for all other stocks, over the next twelve months. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 10% upside from the current market price for stocks with market
capitalisation in excess of INR 200 billion and REITs* and in the range of 10% downside to 15% upside from the current market price
for all other stocks, over the next twelve months.
Sell Price expected to move downwards by more than 10% from the current market price over the next twelve months.
* REITs refers to Real Estate Investment Trusts.
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having
trading memberships of the BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). No material disciplinary action has been taken by SEBI
against JM Financial Institutional Securities in the past two financial years which may impact the investment decision making of the investor. Registration
granted by SEBI and certification from the National Institute of Securities Market (NISM) in no way guarantee performance of JM Financial Institutional
Securities or provide any assurance of returns to investors.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of
managing offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the
company(ies) covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive
compensation from the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy
or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower
to, or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is
engaged in, it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per
cent or more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and their immediate relatives are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this
report. The Research Analyst(s) principally responsible for the preparation of this research report or their immediate relatives (as defined under SEBI
(Research Analysts) Regulations, 2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any
compensation from the company(ies) covered under this report, or from any third party, in connection with this report or (c) do not have any other material
conflict of interest at the time of publication of this report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies)
covered under this report.

While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional
Securities may not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in
this report. This report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.
This research report is based on the fundamental research/analysis conducted by the Research Analyst(s) named herein. Accordingly, this report has been prepared by studying/focusing on
the fundamentals of the company(ies) covered in this report and other macro‐economic factors. JM Financial Institutional Securities may have also issued or may issue, research reports and/or
recommendations based on the technical/quantitative analysis of the company(ies) covered in this report by studying and using charts of the stock's price movement, trading volume and/or
other volatility parameters. As a result, the views/recommendations expressed in such technical research reports could be inconsistent or even contrary to the views contained in this report.
The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire
risk of any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves
the right to make modifications and alterations to this statement as they may deem fit from time to time.
This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction.
This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country
or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject JM Financial
Institutional Securities and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein
may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required
to inform themselves of and to observe such restrictions.
Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
Securities"), a U.S. registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA") in order to conduct certain business in the United
States in reliance on the exemption from U.S. broker-dealer registration provided by Rule 15a-6, promulgated under the U.S. Securities Exchange Act of 1934 (the
"Exchange Act"), as amended, and as interpreted by the staff of the U.S. Securities and Exchange Commission ("SEC") (together "Rule 15a-6").
This research report is distributed in the United States by JM Financial Securities in compliance with Rule 15a-6, and as a "third party research report" for
purposes of FINRA Rule 2241. In compliance with Rule 15a-6(a)(3) this research report is distributed only to "major U.S. institutional investors" as defined
in Rule 15a-6 and is not intended for use by any person or entity that is not a major U.S. institutional investor. If you have received a copy of this research
report and are not a major U.S. institutional investor, you are instructed not to read, rely on, or reproduce the contents hereof, and to destroy this research
or return it to JM Financial Institutional Securities or to JM Financial Securities.
This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content.
The research analyst(s) preparing this research report is/are resident outside the United States and are not associated persons or employees of any U.S.
registered broker-dealer. Therefore, the analyst(s) are not subject to supervision by a U.S. broker-dealer, or otherwise required to satisfy the regulatory
licensing requirements of FINRA and may not be subject to the Rule 2241 restrictions on communications with a subject company, public appearances and
trading securities held by a research analyst account.
Any U.S. person who is recipient of this report that wishes further information regarding, or to effect any transaction in, any of the securities discussed in
this report, must contact, and deal directly through a U.S. registered representative affiliated with a broker-dealer registered with the SEC and a member of
FINRA. In the U.S., JM Financial Institutional Securities has an affiliate, JM Financial Securities, Inc. located at 1325 Avenue of the Americas, 28th Floor,
Office No. 2821, New York, New York 10019. Telephone +1 (332) 900 4958 which is registered with the SEC and is a member of FINRA and SIPC.
Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom
(U.K.) by the Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial
Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial
Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the
meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be
communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant
persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is
available only to relevant persons and will be engaged in only with relevant persons.
Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement or a public
offering of the securities described herein in Canada or any province or territory thereof. Under no circumstances is this report to be construed as an offer to
sell securities or as a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will
be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly
registered under applicable securities laws or, alternatively, pursuant to an exemption from the registration requirement in the relevant province or territory
of Canada in which such offer or sale is made. This report is not, and under no circumstances is it to be construed as, a prospectus or an offering
memorandum. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information
contained herein or the merits of the securities described herein and any representation to the contrary is an offence. If you are located in Canada, this
report has been made available to you based on your representation that you are an “accredited investor” as such term is defined in National Instrument 45-
106 Prospectus Exemptions and a “permitted client” as such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and
Ongoing Registrant Obligations. Under no circumstances is the information contained herein to be construed as investment advice in any province or
territory of Canada nor should it be construed as being tailored to the needs of the recipient. Canadian recipients are advised that JM Financial Securities,
Inc., JM Financial Institutional Securities Limited, their affiliates and authorized agents are not responsible for, nor do they accept, any liability whatsoever
for any direct or consequential loss arising from any use of this research report or the information contained herein.

Aditya Birla Capital IC 6nov23

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6 November 2023

Aditya Birla Capital

Table of Contents Page No

Aditya Birla Capital (ABCL) – Company Overview 8

Leadership change driving coherent strategy & execution focus 10

Aditya Birla Finance (NBFC) – Well diversified products portfolio 15

Aditya Birla Health Insurance (ABHI) – retail focus driving performance 38

Key Management Personnel 41

JM Financial Institutional Securities Limited Page 2

Aditya Birla Capital

Recommendation and Price Target Financial Summary

Aditya Birla Capital – Focus Charts

JM Financial Institutional Securities Limited Page 4

Exhibit 7. ABHFL: AUM growth trend Exhibit 8. ABHFL: Disbursements mix

Source: Company, JM Financial

Source: Company, JM Financial

Exhibit 11. ABHFL: Trend in asset quality

Exhibit 14. ABHFL: Return ratios trend

ROA (%) ROE (RHS) (%)

2.5% 12.7% 16%

Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 5

Source: Company, JM Financial

PAT (INR mn) YoY (%)

JM Financial Institutional Securities Limited Page 6

25,000 8.3% 8.3%

Source: Company, JM Financial

Source: Company, JM Financial Source: Company, JM Financial

Aditya Birla Capital – Company Overview

Exhibit 25. ABCL – Company structure

Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 8

Exhibit 26. Aditya Birla Capital - Key financial metrics

Aditya Birla Finance

Networth (INR bn) 62 73 81 88 99 114 157 187 13% 28%

Networth (INR bn) 8 12 14 15 17 20 27 31 21% 26%

Aditya Birla AMC FY18 FY19 FY20 FY25E (FY18-23) (FY23-25E)

APE (INR bn) 12 19 19 22 25 34 39 44 23% 13%

Source: Company, JM Financial

Leadership change driving coherent strategy & execution focus

Exhibit 27. One ABC Architecture

Source: Company, JM Financial, Note: 155 One ABC locations is as at Mar’23.

Exhibit 28. One ABC Architecture

Source: Company, JM Financial, Note: 155 One ABC locations is as at Mar’23.

JM Financial Institutional Securities Limited Page 10

Exhibit 29. One ABC Architecture

Source: Company, JM Financial, Note: 155 One ABC locations is as at Mar’23.

Direct-to-Customer (D2C) Platform: ABCL incorporated a wholly owned subsidiary,

Exhibit 30. D2C Platform offering PIFA products

Source: Company, JM Financial, Note: 155 One ABC locations is as at Mar’23.

JM Financial Institutional Securities Limited Page 11

Exhibit 31. Features of Udyog Plus platform

Source: Company, JM Financial

Exhibit 32. ABC Payment Strategy

Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 12

Infinite (Start-up engagement Programme): ABCL launched INFINITE, a flagship start-

Exhibit 33. End-to end Digital Loan process features

Source: Company, JM Financial

Exhibit 34. Digital partnerships and assets

Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 13

Exhibit 35. Digital adoption in insurance business