This is the reason markets are irrational and offers opportunity to smart value investors, i am holding this from early 50 levels and only increasing holdings at every fall. ROE and ROA will jump dramatically going forward, ABCD their digital platform is also quiet impressive. Their are stocks in current market which are discounted their 5-10 year earnings in current price and still trade at higher valuations without a strong promotor history. Here we have AB Capital despite 30% average growth in profits, a large financial house is trading at P/B of 1.5. only Mutual fund business valuation and Insurance business valuation is 75% if current price.
Appointment of Vishakha mulye has been the key part which has turned around AB Capital. Good to see the extension ( on expected lines so don’t expect any fireworks)
Aditya Birla Capital Limited (ABCL) has invested ₹249.99 crore in its wholly owned subsidiary Aditya Birla Housing Finance Ltd (ABHFL) through a rights issue on 30 August 2025 .
^^ they also infused money into Housing finance. Basically looking at Strengthening the Housing Finance Arm
This move is not an immediate game-changer for Aditya Birla Capital’s financials or stock price. But it is a strategic enabler — fortifying ABHFL’s balance sheet and positioning it for sustained growth in the housing finance sector.
What this data shows me is two things - 1) AB Cap has been the most “consistent” in net profit delivery in the last 5 years. The only other co which grew PAT every year is Bajaj Finserve and AB Cap is growing faster than them; 2) Despite (1), AB Cap trades at the median P/B multiple of 1.5 and below the median PE multiple of 15.6. + AB Cap has not presented any major negative surprises through demon, IL&FS, Covid etc and continues to have one of the best cost of borrowing in the market.
If we believe this data then clearly there is a factor other than pure fundamentals that weighs on AB Capital’s stock performance. This could be management perception, asset quality, growth outlook, holdco structure etc. Personally I think it’s a perception issue because the other factors are more or less in line or better than the peer set.
The bet (hope) is that with the new CEO joining there’s an improvement in the corporate culture and perception of ABC. A few other things that make me bullish 1) the NBFC and HFC loan books which have been flattish since IPO are finally on track to start growing meaningfully again in FY23; 2) the health insurance business which has been a 250-300 cr drag on PAT every year is about to break even and 3) promoter/insider buying has been highest among the peer set.
Big picture - why do I bother? I look for opportunities where I can see a 5x-10x outcome eventually. In today’s context that’s a HDFC Life to Bajaj Finserve size of company. I do believe ABC has the platform like Bajaj did to deliver that with the right leadership.
AB Capital becomes a 100,000 crore company. Stock is up 4x since I wrote the above comparison with other diversified financials. Gap in market cap with Bajaj Finserv was 11x then, it has narrowed to 2.8x now. Great turnaround + value investing case study!
