Why Aditya Birla Group Stocks are Rising

India's booming economy is fueled in part by its powerful conglomerates.

These sprawling business empires extend across various sectors, from technology and finance to consumer goods, acting as major contributors to the country's economic growth.

Following the liberalisation and privatisation reforms that opened India's markets to the world, a wave of private players emerged, establishing themselves across multiple industries and forming these influential conglomerates.

These giants have become central figures driving India's economic development.

Among them, one conglomerate that has recently captured significant attention is the Aditya Birla group.

This group, with a long history of international operations dating back to the establishment of textile mills in Thailand in the 1960s and a palm oil refinery in Malaysia the following decade, boasts a strong global presence.

On 24 April 2024, four of its stocks surged to their 52-week highs. This significant development begs the question: What's driving this impressive performance?

Here's why Aditya Birla group stocks are rising...

#1 Aditya Birla Fashion & Retail

First on the list is Aditya Birla Fashion.

Shares of Aditya Birla Fashion & Retail rallied 8% on 23 April 2024, reaching a 52-week high of Rs 273.

This uptick followed the board's approval of the demerger of Mudra Fashion and Lifestyle.

Last week, the board greenlit the vertical demerger of the Madura Fashion and Lifestyle business from ABFRL, forming a new entity named Aditya Birla Lifestyle Brands Ltd (ABLBL). Upon completion, this new entity will be listed separately.

The demerger process is anticipated to conclude within 12 months, post the merger of TCNS into the business, expected in four months.

ABFRL's management clarified its current phase of consolidation, emphasising limited prospects for near-term acquisitions.

Within ABFRL's business segments, including value retail, ethnic portfolio, luxury, and digital brands like TMRW, the company highlighted the need for additional capital investment to fuel growth.

Fundraising of Rs 25 billion (bn) is planned to drive growth through brand investments and debt reduction, with the capital structure yet to be finalised.

Emphasising ethnic wear as a primary focus initially, with an annualised revenue potential of Rs 20 bn, the company anticipates it could rise to Rs 40-50 bn. TMRW will have a separate funding path from the planned raise.

On Madura business, the company said the debt level of the vertical will drop significantly in the coming years despite investments towards growth.

The company also mentioned that there is a large runway of growth in the sportswear and innerwear space.

Brands can generate positive cash flows, which can be invested to strengthen core brands going ahead.

The company emerged after the consolidation of the branded apparel businesses of the Aditya Birla Group comprising ABNL's Madura Fashion division and ABNL's subsidiaries Pantaloons Fashion and Retail (PFRL) and Madura Fashion & Lifestyle (MFL) in 2015.

It obtains 60% of its revenue from Madura Fashions, under which the company owns several brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England.

Its international Brands portfolio also comes under this division, which includes The Collective and select brands such as Ted Baker, Ralph Lauren, and American Eagle.

For more details, see the Aditya Birla Fashion & Retail company fact sheet and quarterly results.

#2 Aditya Birla Money

Second on the list is Aditya Birla Money.

The share price of this Birla group stock engaged in the business of securities broking hit a 5% upper circuit to Rs. 128.65 in Tuesday's trading session.

This comes after the company announced strong financial results for the March 2024 quarter.

In this quarter, the company reported a remarkable growth trajectory, with revenue from operations reaching Rs. 1.1 bn, marking a substantial 73% increase compared to the same period last year.

Moreover, its profit before tax soared by 109% to Rs 204.2 million (m), up from Rs 97.7 m recorded in Q4 FY22-23. Net profit also showed a commendable improvement, rising by 8.7% from Rs 151.4 m to Rs 164.6 m.

Specifically, Aditya Birla Money witnessed robust revenue generation from its broking business, which reached Rs 987.2 m, reflecting an 84.39% year-on-year growth.

Additionally, income from the wholesale debt market saw a positive uptick, reaching Rs 134.7 m, up by 16.93% compared to the previous year.

Looking ahead, the company is poised to expand its product offerings, positioning itself for further growth and diversification.

Aditya Birla Money (ABML) is a subsidiary of Aditya Birla Capital. The company is a stock broking and capital market products distributor, offering equity and derivative trading through NSE and BSE currency derivatives on MCX-SX and commodities trading through MCX and NCDEX.

For more details, see the Aditya Birla Capital company fact sheet and quarterly results.

#3 Aditya Birla Capital

Third on the list is Aditya Birla Capital.

Shares of Aditya Bila Capital witnessed a remarkable surge in its share prices, rallying by 6.9% yesterday and climbing an additional 7% today, reaching a 52-week high.

This upward trajectory can be attributed to its robust expansion strategy, particularly with the launch of a new digital platform.

Aditya Birla Capital aims to onboard 30 m new customers over the next three years through this platform, streamlining the customer acquisition process.

Currently, Aditya Birla Capital serves a substantial customer base of over 35 m across various sectors, including lending, insurance, and asset management.

The conglomerate boasts a vast small business ecosystem of 250,000 and caters to over 250 m customers through diverse products and services such as telecom, fashion, and retail.

With a comprehensive suite of 22 products and services spanning across its offerings, Aditya Birla Capital aims to solidify its position in the top three across its core businesses.

Moreover, the broader financial services sector is anticipated to expand at twice the rate of the annual GDP growth.

Aditya Birla Capital is the holding company for the financial services businesses of the Aditya Birla group, which is a universal financial solutions group catering to the diverse financial needs of its customers across their life stages.

The company has a portfolio across lending, insurance, asset management, and other services, which caters to a wide range of customer segments, needs, channels, and geographies.

The main companies under its portfolio include Aditya Birla Finance, Aditya Birla Housing Finance, Aditya Birla Sun Life Insurance, Aditya Birla Sun Life AMC, Aditya Birla Health Insurance, etc.

For more details, see the Aditya Birla Capital company fact sheet and quarterly results.

#4 Grasim Industries

Last on the list is Grasim Industries.

Grasim Industries hit its 525-week high of Rs 2,384 on 24 April 2024.

This notable achievement is underpinned by a robust long-term outlook. Grasim Industries aims to achieve a Rs 10 bn revenue milestone for its Birla Opus pivot.

The company anticipates profitability once it surpasses Rs 100 bn in gross revenue within three years of full-scale operations.

Setting ambitious targets, Grasim Industries aims to emerge as the second-largest player in India's Rs 800 bn decorative paints market, currently dominated by Asian Paints.

With investments totalling Rs 100 crore, the company is positioning itself for substantial growth in this segment.

In light of its competitor Infra.Market's remarkable growth, which has led to positive profits and a valuation of US$ 2.5 bn, Grasim Industries is eyeing significant expansion.

The company aims to scale segment gross revenues to US$ 1 billion by FY27.

For more details, see the Grasim Industries company fact sheet and quarterly results.

Conclusion

Top Aditya Birla Group boasts a strong track record of success across various sectors, suggesting potential for future growth.

The company's name carries a strong reputation for innovation and long-term vision. This strong brand image adds an element of trust and stability to your investment.

Over the years the company has remained at the forefront of innovation, it does not mean Reliance stocks aren't vulnerable to macroeconomic conditions.

while Aditya Birla group's strong track record and reputable brand image suggest potential for future growth, buying stocks at their 52-week high requires careful consideration.

Buying stocks at their 52-week high can be a double-edged sword and depends on various factors, including an individual's investment strategy, risk tolerance, and the company's fundamentals.

Investors should conduct thorough research on the company's fundamentals, market conditions, and potential risks before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...