This Aditya Birla Group stock surged 17% today; up 74% so far in December

Aditya Birla Money shares hit a record high of Rs 289, as they surged 17 per cent on the BSE in Thursday's intra-day trade amid heavy volumes in otherwise a weak market.

Aditya Birla Money shares hit a record high of Rs 289, as they surged 17 per cent on the BSE in Thursday’s intra-day trade amid heavy volumes in an otherwise weak market. Thus far in the month of December, the stock of this Aditya Birla Group company has zoomed 74 per cent, as compared to a marginal 0.32 per cent rise in the BSE Sensex. Since October 8, 2024, it skyrocketed 119 per cent from the level of Rs 132.25 on the BSE.

 

At 01:07 PM, Aditya Birla Money was trading 13 per cent higher at Rs 279.60, as against the 1.1 per cent decline in the BSE Sensex. The average trading volumes on the counter nearly doubled, with a combined 2.09 million shares, representing 3.7 per cent of total equity of the company, changing hands on the NSE and BSE.

 

Aditya Birla Money is engaged in the business of securities broking, portfolio management services, commodity broking services, depository participant, research analyst, e-insurance repository solutions and distribution of other financial products. Aditya Birla Capital, the holding company for the financial services business of the Aditya Birla group, owns 73.5 per cent stake in Aditya Birla Money.

 

In the first half (April to September) of the financial year 2024-25 (H1FY25), Aditya Birla Money’s profit after tax (PAT) doubled to Rs 43.05 crore, on the back of a strong operational income. The company had reported a PAT of Rs 21.36 crore in H1FY24. Total revenue from operations grew 39 per cent to Rs 243.51 crore, from Rs 174.82 crore in the year-ago period.

 

The company's retail broking business continues to improve its market share through digital initiatives. "The rise of discount brokers has made it easy to invest in financial markets via zero brokerage, e-KYC and user-friendly mobile-based platforms which have made stock buying as seamless and intuitive as shopping online. Quick and paperless onboarding, UPI-based fund transfers, and a stable and scalable product have enabled equity participation for every Indian," Aditya Birla Money said in its FY24 annual report.

 

The stock broking industry has witnessed significant transformations, marked by extensive digitisation, a shift towards value-added services, and the adoption of fee-based revenue models. Hybrid and subscription-based models have also emerged, offering comprehensive services under one-time subscription fees. Post-pandemic, retail investor participation surged during bullish market phases; however, sustaining this momentum in a sideways or bear market remains a critical factor, the company said.

 

Being a broking company, Aditya Birla Money is subject to capital market fluctuations in earnings, as profitability is a function of broking income, dependent on trading volume and interest income, largely earned on the margin funding book and client margin placed as fixed deposits with the exchanges. 

 

Further, the wholesale debt market book provides margin spreads along with capital gains during favourable interest rate movements to the duration of portfolio held. The book gets churned on an average every seven-to-10 days while the margin trade financing book gets churned on an average of every 30 days, as per the management, according to India Ratings and Research (Ind-Ra).

 

FY24 and 1HFY25 witnessed a spurt in trading volumes with active participation from retail investors, which resulted in a strong revenue growth for Aditya Birla Money and an increase in the client base over the period. The company is likely to increase the share of revenues from its margin trade financing book, given the pricing pressures in the brokerage business, the rating agency said in rationale.