Shares of this mid-cap stock jumped 3 percent on Wednesday after the company invested in its wholly-owned subsidiary on a rights basis. In the last six months, the company’s stock has gained nearly 25 percent.
With a market capitalization of Rs 46,723.64 crores, the stocks of Aditya Birla Capital Limited (ABCL) started their trading session on Wednesday at Rs 179.40 and currently trade at Rs 179.80, gaining around 3 percent as compared to the previous close of Rs 174.45 apiece.
One of the prime reasons for the company’s stock price to increase is pertaining to the recent regulatory filing with the BSE intimating an investment of nearly Rs 750 crores in equity shares of Rs Aditya Birla Finance Limited (ABFL), a wholly-owned material subsidiary of the company, on a rights basis.
Being a cash consideration and shares of ABFL been allotted on 26th September 2023, the investment has been made to meet the growth and funding requirements of ABFL and to improve its leverage ratio.
During the past couple of financial years, the company has consistently been able to increase its prime business indicators such as operating revenues and after-tax profits.
The operating revenues increased from Rs 22,229.91 crores during FY21-22 to Rs 27,415.65 crores during FY22-23, and, the after-tax profits, during the same time period, went up from Rs 1,660.07 crores to Rs 4,824.07 crores.
Coming onto the profitability metrics, both, the return on equity (RoE) as well as the return on capital employed (RoCE) soared with the former increasing from 11.5 percent during FY21-22 to 27.27 percent during FY22-23, and, the latter, moving up from 8.26 percent to 11.64 percent keeping the timeframe the same.
Jefferies, an international investment bank, has given a ‘Buy’ call on the company’s stock with a target price of Rs 215 indicating a potential upside of around 20 percent as compared to the prevailing stock prices.
The latest shareholding pattern of the company portrays the Promoters holding a 69.1 percent stake, and the Foreign Institutional Investors (FIIs), consistently increasing their stake, holds a 10.53 percent stake in the company.
Established in 2007, Aditya Birla Capital is a Mumbai-based wealth management firm with a strong presence across various sectors such as asset management, structured finance, corporate lending, housing finance, and many more.
Written by Amit Madnani
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