Aditya Birla Capital shares jump 3% on Rs 750 crore investment in subsidiary

Separately, sentiment around ABCL shares also turned positive after global investment firm Jefferies gave a bullish view on the company.

Jefferies initiated a ‘buy’ call on ABCL shares, with a target price of Rs 215 apiece. This indicates an upside potential of over 23 percent from the stock’s previous close of Rs 174.45 on BSE on Tuesday.

Jefferies believed that ABCL was poised to double profits in the next 3 years, capitalizing on wider network and higher cross-sells.

The non-banking finance company (NBFC) can gain from MSME (medium, small and micro enterprises) lending opportunities as it expands branches, leverages low cost of funds and shifts to lower ticket loans, said Jefferies.

“Over FY23-26, this should drive 29 percent compounded annual growth rate (CAGR) in earnings per share (EPS) and lift return on equity (ROE) to 16 percent at the NBFC,” Jefferies said in its note.

“In life insurance, strong APE (annual premium equivalent) growth and better VNB (value of new business) margins due to scale gains can drive 26 percent VNB CAGR,” the brokerage observed.

On Wednesday, ABCL shares rose as much as 3.1 percent to hit an intra-day high of Rs 179.80 apiece on BSE. The stock has shown solid performance over the past one year, rallying over 64 percent compared with a nearly 15 percent jump in the benchmark Sensex index during the same period.

Shares of Aditya Birla Capital Ltd were trading at Rs 178.70, up 2.44 percent, on BSE at 10:55 AM.