ABCAPITAL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.6

📊 Fundamental Analysis Summary

Aditya Birla Capital Ltd (ABCAPITAL) shows signs of being a moderately attractive long-term investment, especially for investors seeking exposure to diversified financial services. However, its high debt and modest capital efficiency temper the upside potential.

Metric Value Interpretation

Market Cap ₹65,937 Cr Large cap — stable and well-established

Stock P/E 20.1 Fairly valued vs. industry PE of 26.1

PEG Ratio 0.79 Undervalued relative to growth — positive signal

ROE / ROCE 11.5% / 9.33% Moderate efficiency — acceptable but not stellar

Dividend Yield 0.00% No dividend — not ideal for income investors

Debt-to-Equity 4.61 Very high — leverage risk, typical for NBFCs but needs close monitoring

EPS ₹12.8 Reasonable earnings base

Book Value ₹117 Price-to-book ratio ~2.15× — fair valuation

PAT Growth (QoQ) -29.7% Sharp decline — short-term concern

RSI / MACD 38.5 / 0.76 RSI near oversold; MACD slightly positive — mixed technical signals

FII/DII Holding Change -1.36% / +2.27% FII selling — sentiment risk; DII strongly bullish

52W Price Range ₹149 – ₹283 Currently near midpoint — no immediate breakout

📉 Valuation & Entry Price Zone

The PEG ratio below 1 suggests the stock is undervalued relative to its earnings growth. However, the sharp drop in quarterly profit and high debt warrant caution.

Ideal Entry Zone: ₹220 – ₹235

This range offers a better risk-reward balance, especially if RSI remains below 40.

Watch for stabilization in PAT and improvement in ROCE before entering aggressively.

🧭 If You Already Hold the Stock

Holding Strategy

Time Horizon: 2–3 years, assuming PAT stabilizes and ROCE improves.

Exit Strategy: Consider partial exit if price crosses ₹275–₹285 without improvement in ROCE or PAT.

Monitor: Debt levels, ROCE trend, and quarterly profit consistency.

Key Triggers to Watch

PAT returning above ₹900 Cr consistently

ROCE improving to 12%+

Debt-to-equity trending below 4.0

🧠 Final Thoughts

ABCAPITAL is a decent long-term candidate with valuation comfort (low PEG) and institutional interest (DII buying). However, its high debt and recent profit volatility make it suitable only for investors with moderate risk tolerance and a multi-year horizon.

Would you like a breakdown of its business segments (insurance, lending, AMC) to assess which verticals are driving growth or dragging performance?

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