Aditya Birla Capital to monetise 2 crore clients over 3 to 5 years: Jefferies

Aditya Birla Capital is on an expansion mode and plans to monetise the company’s 2 crore clients to boost its financial services such as retail loans, insurance and AMC business, according to brokerage firm Jefferies.

The company would work on cross-selling the financial products over three to five years. At present, merely 2 lakh (1 percent) of their customer base have been sold products of more than one line of business.

Aditya Birla Capital offers loans to corporate and the retail/SME sector. With total loans of over Rs 45,000 crore, large and mid-corporate loans comprised 43 percent and the company is looking to consolidate this segment.

Jefferies said that the actual opportunity is in the retail and SME segment through cross-sells and network expansion that will support the doubling of its loan book and increase in its share in loans to 65 percent by FY23-24. The company also has the advantage of access to funds at lower costs. Over the next three years, loans are expected to grow at 15-17 percent Compound Annual Growth Rate (CAGR) led by 27-28 percent CAGR in retail and SME loans.

Jefferies noted that Aditya Birla Housing Finance should benefit from opportunities in the sector and that business could grow at 18-20 percent CAGR over the next three years.

Meanwhile, Aditya Birla Sun Life Insurance (51 percent subsidiary) has delivered a strong turnaround over the last two years following a partnership with HDFC Bank.

Another subsidiary Aditya Birla Sun Life is the fourth-largest player in the sector with an 8.6 percent share in AUMs. The brokerage house says a 12 to 15 percent CAGR in AUMs is expected over the next three years and the target is to increase the share of equity AUMs from 34 percent now to 40 percent.

Jefferies said listing of MF will lead to a more transparent valuation on a business that drives 27 percent of consolidated profit. Life and health insurance companies trade at healthy valuations, reflecting growth potential and limited risks, the report added.