Tactical stock idea: Morgan Stanley sees further rerating on Aditya Birla Capital

Morgan Stanley on Wednesday added Aditya Birla Capital Ltd as its 'tactical idea', expecting Aditya Birla Capital share price to rise relative to the country index over the next 60 days. It suggested a target of Rs 427 on the stock. On Wednesday, the scrip closed flat at Rs 360.80 apiece.

The foreign brokerage expects the NBFC loan growth to accelerate to 23 per cent YoY in Q3 from 21.7 per cent in Q2. Profit after tax, it said, growth should accelerate to 27 per cent YoY from 4 percent in Q2, which should also interest investors. 

"We expect NIM to remain stable QoQ; however, sustained QoQ loan growth in unsecured consumer loans could lift investor confidence on NIM expansion from 4QF26 onwards. ROA expansion should continued helped by lower cost to assets after a spike last quarter. Credit costs could remain stable at below
the normalised band articulated by the company," it said. 

Morgan Stanley said the Aditya Birla Capital stock has done well in 2025 but there is scope for further re-rating on sustained execution.

"We estimate that there is about an 80 per cent-plus (or highly likely) probability for the scenario," it said.  

In its valuation, Morgan Stanley applied a firm-wide 20 per cent holdco discount to all subsidiaries, except the NBFC business (standalone).

Risks to upside includes a better-than-expected asset quality and credit cost outcomes, faster-than-expected ROE improvement and abating of concerns around unsecured loans. 

Risks to downside include a sharp rise in bad loans, especially in the personal unsecured segment, a slowdown in loan growth in lending businesses
and an adverse regulatory and APE growth outcomes in the life insurance business.