Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Aditya- BirlaAdityaCapitalBirlaLtd (ADTB.NS)Capital Ltd (ADTB.NS)

Attractive valuation; scope for structural re-rating; OW

PRICE TARGET Rs450.00 OVERWEIGHT THESIS

85% base, 10% bear, 5% bull, sum-of-the-parts. Skew to bear case reflects current ▪The company's strong parentage, funding

geopolitical uncertainty. Three key businesses make up ~85% of base case valuation: access, brand, customer base and

NBFC (target core P/B 2.3x Mar-28e BPS) - COE 13.4%, F29 core ROE ~17.5%. distribution should help it achieve a

Life Insurance: 1.0x EV (Mar-27e) + 15x VNB (12-month period ending Mar-28e). moderate risk-return profile, which positions

AMC - at current market value. it better than many lenders amid emerging

We apply a firm-wide 20% holdco discount to all subsidiaries except the NBFC business geopolitical risks.

(standalone). ▪In the NBFC and HFC segments, it has

strengthened its balance sheet and has been Rs411.42

progressing well toward its guided

Consensus Price Target Distribution Rs365.00 Rs460.00 profitability metrics. In the life insurance MS PT

business, profitability has made strongSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

progress.

▪In summary, we think ABCL will be able to

navigate the rising macro risks better.

RISK REWARD CHART ▪Attractive starting point of valuation

(relative to its profitability and to peers)

INR makes risk reward attractive.

Rs650.00Rs650.00(+65.84%)Rs650.00(+65.84%)(+65.84%)

Consensus Rating Distribution

100%Overweight

0% Equal-weight

450 Rs450.00Rs450.00(+14.81%)Rs450.00(+14.81%)(+14.81%)

0% Underweight

Rs391.95Rs391.95Rs391.95

MS Rating

300 Source: Refinitiv, Morgan Stanley Research

Rs295.00Rs295.00(-24.74%)Rs295.00(-24.74%)(-24.74%)

150 Risk Reward Themes