ABCAPITAL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.2

📊 Core Financials

• Revenue & Profitability: PAT rose from 676 Cr. to 916 Cr., but quarterly profit variation shows -11.2% decline YoY.
• Margins: ROE at 12.5% and ROCE at 9.48% reflect moderate efficiency and profitability.
• Debt: Debt-to-equity ratio of 4.56 highlights high leverage, typical of financial services but risky.
• Cash Flow: Dividend yield is 0.00%, with reinvestment favored over payouts.

💹 Valuation Indicators

• P/E Ratio: 32.0 vs Industry PE of 30.2 — slightly overvalued.
• P/B Ratio: Current Price 349 ₹ vs Book Value 103 ₹ → ~3.4x, moderately expensive.
• PEG Ratio: 0.31, suggesting valuation is well aligned with growth potential.
• Intrinsic Value: Current price reflects fair valuation, but leverage risk reduces margin of safety.

🏢 Business Model & Competitive Advantage

• Aditya Birla Capital operates as a diversified financial services company across lending, insurance, and asset management.
• Competitive advantage lies in brand strength, diversified portfolio, and wide distribution network.
• High leverage and modest efficiency metrics limit resilience compared to peers.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive near 300–320 ₹ range, closer to DMA 200 and support levels.
• Long-Term Holding: Suitable for investors seeking exposure to diversified financial services, but leverage risk must be monitored.

✅ Positive

• PAT growth quarter-on-quarter (916 Cr. vs 676 Cr.).
• PEG ratio (0.31) indicates valuation aligned with growth.
• DII holdings increased (+0.76%), showing domestic institutional confidence.

⚠️ Limitation

• High debt-to-equity ratio (4.56) reflects leveraged balance sheet.
• P/E (32.0) and P/B (~3.4x) indicate premium valuation.
• Dividend yield is 0.00%, limiting income appeal.

📉 Company Negative News

• FII holding reduced by -0.37%, showing declining foreign investor confidence.
• Quarterly profit variation (-11.2%) highlights earnings pressure.

📈 Company Positive News

• PAT improved sequentially, showing operational strength.
• DII holdings increased (+0.76%).
• Stock trading above DMA 50 & DMA 200, showing technical resilience.

🌐 Industry

• Industry PE at 30.2, slightly lower than ABCAPITAL’s valuation.
• Financial services sector benefits from rising credit demand, insurance penetration, and asset management growth.

🔎 Conclusion

• ABCAPITAL is fundamentally stable with diversified operations but faces high leverage risk.
• Valuations are slightly stretched compared to industry peers, limiting upside potential.
• Best suited for accumulation near 300–320 ₹ levels.
• Long-term investors can hold for exposure to financial services growth, but should monitor debt and profitability trends.