Aditya Birla Capital: Navigating Growth with Digital Prowess in Q2 FY26

Aditya Birla Capital Limited (ABCL) has once again demonstrated a robust financial performance in the second quarter of Fiscal Year 2026, showcasing resilience and strategic agility amidst a dynamic macroeconomic environment. The company reported a consolidated profit after tax of 855 crore rupees, marking a 3% year-on-year increase. This growth was underpinned by a solid 4% year-on-year rise in total consolidated revenue, reaching an impressive 12,481 crore rupees. These figures reflect ABCL's consistent focus on driving quality and profitable growth across its diversified financial services platform.

The company's core lending businesses, NBFC and Housing Finance, were significant contributors to this quarter's strong results. The NBFC segment witnessed a remarkable 39% sequential increase in disbursements, totaling 21,990 crore rupees, the highest quarterly disbursement ever. This was complemented by a healthy asset quality, with gross stage 2 and 3 loans declining by 67 basis points sequentially to 3.03%. The Housing Finance business also delivered strong growth momentum, with disbursements soaring by 44% year-on-year to 5,786 crore rupees, leading to a 65% year-on-year portfolio growth. The operating leverage in HFC is clearly kicking in, with RoA improving to 1.82% and RoE to 13.95%.

ABCL's Asset Management business continued its upward trajectory, with average AUM growing by 11% year-on-year to over 4.25 trillion rupees. Equity AUM also saw a 7% sequential increase to 1.92 trillion rupees, with 70-75% of equity AUM in the top 2 quartiles for 6-month and 9-month returns. The Life Insurance business emerged as the fastest-growing private life insurer, with individual first-year premium growing by 19% year-on-year in H1 FY26. The Net VNB margin increased by 420 basis points year-on-year to 11.6%. The Health Insurance segment, powered by its differentiated 'Health First' model, reported a robust 31% year-on-year growth in gross written premium in H1 FY26.

A key highlight of ABCL's strategy is its strong emphasis on digital transformation and omnichannel architecture. The D2C platform, ABCD, has successfully acquired over 7.6 million customers, offering a comprehensive portfolio of 26+ products. The B2B platform, Udyog Plus, has scaled up significantly, contributing to 32% of unsecured business loans AUM. This digital prowess, coupled with an expanding physical distribution network of 1,712 branches, ensures a seamless customer experience and deeper market penetration.

Management's commentary underscored a commitment to prudent risk management and sustainable returns. Despite a one-off increase in NBFC operating expenses, the company expects normalization and aims to maintain credit costs within a healthy range. While the recent GST exemption for life insurance premiums presents short-term margin pressures, management is actively evaluating mitigation strategies and remains confident in achieving a net VNB margin of over 18% in FY26. The Health Insurance business is also focused on improving its combined ratio from 105% in the previous year.

In conclusion, Aditya Birla Capital's Q2 FY26 performance reflects strategic clarity, disciplined execution, and a strong focus on leveraging data, digital, and technology to drive growth. The company's diversified business model, coupled with proactive risk management and an expanding omnichannel presence, positions it well to capitalize on India's resilient economic growth and increasing financialization. Investors can look forward to continued momentum and value creation in the coming quarters.