Morgan Stanley has maintained an ‘Overweight’ rating on Aditya Birla Capital Ltd., while raising the target price to ₹320, indicating an upside from the current market price of ₹279.80. The brokerage noted a solid Q1FY26 performance and sees the stock as one of the few financials with room for both earnings upgrades and re-rating.
Q1 PAT beats estimates, asset quality manageable
AB Capital reported a 4% beat on consolidated profit after tax (PAT) in Q1FY26, with a 2% beat in the lending businesses and an 8% beat in the asset management business.
Morgan Stanley acknowledged some softness in asset quality in the NBFC arm, but said it was likely less than feared by the market, offering reassurance to investors concerned about slippages or credit cost spikes.
Valuation and outlook: Room for upgrades
According to Morgan Stanley, AB Capital remains well-placed from a valuation standpoint, with the stock trading at reasonable multiples. It sees scope for earnings upgrades, which, coupled with stable-to-improving business performance, could drive a gradual valuation re-rating.
Brokerage view summary:
| Brokerage | Rating | Target Price | Key Takeaways |
|---|---|---|---|
| Morgan Stanley | Overweight | ₹320 | Q1 PAT beat estimates, NBFC asset quality manageable, valuation re-rating potential |
Disclaimer: This article is based on brokerage reports and is for informational purposes only. It does not constitute investment advice. Investors should consult their financial advisors before making investment decisions.
