Aditya Birla Capital (ABC) and its wholly-owned subsidiary, Aditya Birla Finance Ltd (ABFL), are scheduled to merge. Following this news, the financial services company’s shares saw a spike, gaining over 4% to reach an intraday high of ₹190.65 earlier today. The domestic brokerage firm JM Financials has maintained its “buy” rating on the Aditya Birla Group shares and projects a 33% increase in value from present levels in the next 12 months at a revised target price of ₹240.
Brokerage increases target price by 9%, projects 33% gain
JM Financials mentioned in its report, ‘’We believe that the scheme would offer key positives which include: a) simplified operations, b) elimination of holding company discount since ABFL was mandated to be listed by September 2025 as per NBFC-UL guidelines, and c) BSE of separate listing costs of ABFL. This also increases CRAR by ~150bps as such postpones the potential need to raise growth capital versus earlier scenario.”
‘’We revise our target price upward to ₹240 (from earlier ₹220) resulting from removal of 15 per cent holding company discount which we had applied on ABFL entity on our previous target price. Maintain BUY,” added JM Financials.
Merger of Aditya Birla Finance and Aditya Birla Capital
One of the fifteen upper-layer non-bank lenders that the RBI has ordered to become public by September 2025 is ABFL. The requirement for the subsidiary to be separately listed is avoided through a merger with the listed parent. Additionally, ABC stated that the planned merger will convert the group from a holding company into an operational non-banking finance company (NBFC) and simplify the group’s organizational structure.
“The proposed amalgamation will create a strong capital base for Aditya Birla Capital to grow its business and participate in India’s growth story, successfully fulfilling its commitment to empower the financial aspirations of millions of Indians,” Kumar Mangalam Birla, chairman, Aditya Birla Group, mentioned in a statement.
“Our financial services business has scaled smartly to emerge as a core growth engine for the Aditya Birla Group,” he added.
‘’The process will result in transfer and vesting of all assets, liabilities and entire business of ABFL with ABC which would take ~9-12 months. Upon the scheme becoming effective, equity investment in ABFL by ABC (which stands at ₹7,000 crore) shall stand cancelled. There will be no change in shareholding, management and/or control of ABC,” stated JM Financials in a report.
The CEO of ABC, Vishakha Mulye, informed analysts on Monday that ABC will acquire all of ABFL’s assets and liabilities as well as its complete business upon the completion of the merger. “There will be no issuance of new shares, hence there will be no change in the shareholding of ABC,” added Mulye.
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