Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AA+/Stable’ rating to the perpetual bonds of Aditya Birla Capital Ltd (ABCL; holding company of the ABCL group) and has reaffirmed its ratings on the existing bank facilities and debt instruments at ‘Crisil AAA/Crisil AA+[1]/Stable/Crisil A1+’.

 

The ratings factor in the strategic importance of ABCL and the financial services business for Grasim Industries Ltd (Grasim; ‘Crisil AAA/Stable/Crisil A1+’), the ultimate parent of ABCL, which along with the promoter group held 68.70% stake in ABCL as on September 30, 2025. Grasim (along with promoter group entities) will maintain majority ownership in ABCL and financial services are expected to be a key focus area from a long-term perspective. Grasim (along with promoter group entities) has provided capital support to ABCL in the last two equity fund raises carried out in fiscals 2020 and 2024 and will endeavour to ensure that ABCL and its subsidiaries maintain liquidity and cushion in capital adequacy/solvency above regulatory requirements.

 

The ratings also factor in the diversified presence of ABCL across the financial services space, comfortable capitalisation and a varied resource profile. These strengths are partially offset by average, albeit improving, profitability and ability to sustain healthy asset quality metrics as portfolio scales up and seasons.

 

[1]For perpetual debt

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of ABCL and its subsidiaries, joint ventures and associates, since they have significant operational and management linkages, and operate under a common brand. Crisil Ratings has also factored in the strong parentage of ABCL and benefits from the same, given the strategic importance of the financial services business.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths

Benefits from strong parentage and strategic importance of financial services

The ratings factor in the strategic importance of ABCL and financial services business for Grasim, the ultimate parent of ABCL, and the promoter group. Grasim, along with promoter group entities, held 68.70% stake in ABCL as on September 30, 2025 (Grasim’s stake stood at 52.43%). Further, ABCL is the holding company for the financial services offerings of the promoter group and thus remains strategically important and a key focus area, given the growth opportunities in this sector. There is strategic oversight provided to the ABCL group, including having key personnel from the group’s senior management on ABCL’s board. ABCL also benefits from the shared brand name of Aditya Birla as well as in terms of synergies derived from various businesses and cross-selling opportunities to the entire ecosystem.

 

Grasim, along with promoter group entities, has provided capital support to ABCL in the last two capital raises; of the Rs 3,000 crore capital raised by ABCL in fiscal 2024, Rs 1,250 crore was infused by Grasim and other promoter group entities. Crisil Ratings expects Grasim, along with the promoter group entities to maintain majority shareholding and endeavour to ensure that ABCL and its subsidiaries maintain liquidity and cushion above regulatory capital adequacy / solvency requirements. Crisil Ratings also believes that the financial services business will remain a key focus area for Grasim and the promoter group over the medium term.

 

Diversified presence in the financial services space

ABCL is the holding company for the financial services business of Aditya Birla Group and holds majority stake in various subsidiaries, which operate mainly in the commercial and retail finance, housing finance, asset management, life and health insurance segments, asset and wealth management, and securities broking. The group has successfully scaled up and attained market leadership positions in business segments such as lending, asset management and life insurance.

 

ABCL has a strong market position in the lending business with total assets under management (AUM) of Rs 1,77,855 crore as on September 30, 2025 (Rs 1,57,404 crore as on March 31, 2025) between non-banking finance companies (NBFCs) business and the Housing Finance Company (HFC), Aditya Birla Housing Finance Ltd (ABHFL). It provides financing products across various asset classes in retail, micro small and medium enterprises (MSMEs) and wholesale segments. ABCL also has strong presence in the asset management business through Aditya Birla Sun Life AMC. It is one of the largest asset management companies (AMC) in India with average closing AUM of Rs 4.25 lakh crore as on September 30, 2025 (Rs 3.81 lakh crore as on March 31, 2025). ABCL, through Aditya Birla Sun Life Insurance, also has a meaningful presence in the life insurance business and is a leading private sector life insurance company in India. Through its securities broking entity Aditya Birla Money Ltd, ABCL offers a wide range of solutions including broking, portfolio management services, and depository services. ABCL also provides health insurance business through Aditya Birla Heath Insurance and has a unique business model of providing health insurance with active customer engagement for driving healthy behaviour and managing customer experience.

 

ABCL is among the larger diversified non-banking finance companies (NBFCs) with AUM of Rs 1,39,585 crore as on September 30, 2025 (Rs 1,26,351 crore as on March 31, 2025). It offered various products such as personal loans, consumer loans, business loans, loan against property (LAP), project loans, corporate loans, construction finance and working capital loans to customers ranging from retail, high networth individuals (HNIs), ultra HNI, micro small and medium enterprises (MSMEs), and mid and large corporates. The share of AUM among the four primary business verticals was corporate and mid-market at 31%, secured business at 46%, unsecured business at 10% and personal and consumer at 13%, as on September 30, 2025. The share of corporate and mid-market segment has come down from 35% couple of years ago and is expected to decrease further with the higher focus on SME and retail segments.

 

Comfortable capitalisation

ABCL has comfortable capitalisation, with an absolute networth (on consolidated basis, including minority interest) of Rs 34,184 crore as on September 30, 2025 (Rs 32,347 crore as on March 31, 2025). ABCL's consolidated gearing was 4.6 times as on September 30, 2025 (4.3 times as on March 31, 2025). This has increased from around 3.4 times as on March 31, 2022, on account of healthy growth seen in the lending business and is likely to increase further but will remain under 4 times on a steady state basis. The gearing level of ABCL at standalone level and ABHFL were at 2.8 times and 6.9 times, respectively, as on September 30, 2025.  The ability to raise capital has supported the capital position of the group; Rs 3000 crore capital was raised during fiscal 2024, wherein Rs 1,250 crore was infused by Grasim and other promoter group entities and remaining Rs 1,750 crore by external investors. Fund received from stake sale in the AMC business in fiscal 2024 also shored up the capital position.

 

ABCL's capitalisation is likely to remain comfortable, considering its flexibility to raise capital, also supported by internal accruals. Further, Crisil Ratings expects Grasim, along with its promoter group entities to maintain majority shareholding and endeavour to ensure that ABCL and its subsidiaries maintain liquidity and cushion above regulatory capital adequacy / solvency requirements.

 

ABCL at standalone  level was adequately capitalised with total capital adequacy ratio of 17.98% as on September 30, 2025 (18.22% as on March 31, 2025). Ability to absorb asset-side risks remained adequate, as indicated by networth coverage to net stage three assets of 21.3 times as on September 30, 2025.(16.5 times as on March 31, 2025)

 

Diversified resource profile

ABCL, on consolidated basis, had outstanding borrowings of Rs 1,55,900 crore as on September 30, 2025 (Rs 1,39,347 crore as on March 31, 2025). Of this, around 99% of which is attributable to the lending business. The group’s resource profile remains diversified with the share of non-convertible debentures at 32% of outstanding borrowings as on September 30, 2025, commercial papers 9%, term loan 40%, cash credit/working capital demand loan 5%, external commercial borrowings 7%, NHB 2% and others (sub-debt, perpetual, inter-corporate borrowings [ICB]) forming the remaining 5%. The investor base is also diversified with banks, mutual funds, HNIs, corporates, provident funds, etc. Further, ABCL group companies also benefit from the parentage in raising funds at competitive rates.

 

ABCL, on standalone basis, had outstanding borrowings of Rs 1,20,444 crore as on September 30, 2025, with non-convertible debentures forming 33% share, commercial papers 9%, term loan 43%, cash credit/working capital demand loans 6%, external commercial borrowings 9%.

Key Rating Drivers - Weaknesses

Improving, albeit moderate, profitability

At a consolidated level, earnings of the group remain well-diversified across lending, insurance, and AMC businesses, resulting in a good mix of fund-based and fee-based revenue. ABCL reported a PAT of Rs 2,957 crore at a standalone level and Rs 3,382 crore on a consolidated basis for fiscal 2025. The return on assets (RoA) and return on equity (RoE) for the group were at 1.3% and 11.65%, respectively, for fiscal 2025. While returns are moderate, the same have improved from 0.9% and 7.6%, respectively, in fiscal 2021. For the six months ended September 30, 2025, the group reported a PAT of Rs 1,733 crore, with annualized RoA and RoE of 1.2% and 10.78%, respectively.

 

Lending business continues to be the majority contributor in the group’s earnings at over 66% share in segment profit before tax (PBT) for fiscal 2025 (80% for first half of fiscal 2026). ABCL at standalone level reported an annualized RoA of 2.2% for first half of fiscal 2026 against RoA of 2.3% for fiscal 2025 and 1.5% for fiscal 2021. ABHFL reported RoA of 1.7% for first half of fiscal 2026 as against 1.5% for fiscal 2025. The trajectory of same will remain a monitorable. Provisioning coverage ratio for the combined lending portfolio was comfortable at 46% as on September 30, 2025.

 

The mutual fund business, run via Aditya Birla Sun Life AMC, continues to generate comfortable returns with RoE of 28.6% for first half of fiscal 2026 (27.1% for fiscal 2025). The earnings profile of the life insurance business remains modest, with RoE below 10%. The health insurance business broke-even in fiscal 2025 with a small profit, however has again reported a loss of Rs 102 crore for first half of fiscal 2026.  Ability of the group to continue the improvement trend in various businesses and hence drive the earnings profile at group level will remain a monitorable.

 

ABCL at standalone level reported a PAT of Rs 1,592 crore, with annualized RoA of 2.2% and a PAT of Rs 2,957 crore for fiscal 2025, with RoA at 2.3% for fiscal 2025. Net interest margins (NIMs) were at 5.7% for first half of fiscal 2026, which has remained range bound 5.8% in fiscal 2025, down from 5.90%in fiscal 2024 given incremental focus towards secured segments. Operating expenses (as a percentage of average managed assets) were at 1.7% for first half of fiscal 2026 (1.7% for fiscal 2025 for erstwhile ABFL). Credit costs (as a percentage of average managed assets) remain steady at 1.1% for first half of fiscal 2026 and 1.2 % in fiscal 2025, with provisioning coverage ratio being comfortable at 44% as on September 30, 2025.

 

Sustenance of asset quality metrics in lending business needs to be seen amidst high growth and changing portfolio mix

While the asset quality metrics for the lending business have improved over the last couple of years, sustenance of the same needs to be seen and remains monitorable given the recent and expected pace of growth and changing portfolio mix. The gross stage 3 for ABCL stood at 1.7% as on September 30, 2025 (2.2% as on March 31, 2025 for erstwhile ABCL). Gross stage-2 also improved to 1.3% as on Sep-25 (1.5% as on Mar-25) from 2.0% a year back. However, this is supported by healthy AUM growth of 16% during fiscal 2025 and 13% (year to date) during first half of fiscal 2026. Higher write-offs during fiscal 2025 and the first six months of fiscal 2026 have also supported the improvement in asset quality metrics. Gross stage 3, adding back write-off done in the first half of fiscal 2026 stood at 1.9%. Further, the growth in last couple of years has been driven by SME and unsecured retail asset segments and is yet to go through economic cycles.

 

ABHFL reported gross stage 3 assets of 0.6% as on September 30, 2025 (0.7% as on March 31, 2025), as against 1.8% as on March 31, 2024. Apart from prime, with recent focus also towards growth in affordable mortgage loans segment, the performance thereon will need to be witnessed. The company has also started growing its developer finance portfolio, which was 15% of total AUM as on September 30, 2025. With recent growth, the gross stage 3 assets on two year lagged basis would be higher. Further, gross stage 3 assets, adding back write-off done in fiscal 2024 stood at 0.6%.

 

While the share of wholesale portfolio of ABCL has decrease from earlier levels, it is expected to remain at the around 30% levels on a steady state basis (31% as on September 30, 2025, 35% as on March 31, 2022). While the exposures are primarily towards better rated corporates, the inherent nature of the asset class is to be chunky. The outstanding exposure towards top 10 Customer stood at 4% of ABCL’s standalone AUM as on September 30, 2025. Any large ticket slippages in this portfolio would risk impacting on the asset quality and profitability of the group.

 

The ability of the management to keep the asset quality metrics under check as the portfolio goes through economic cycles, and with expectation of continued healthy pace of growth, will remain a key monitorable. 

Liquidity Superior

ABCL, on consolidate basis, had cash and equivalents worth Rs 3,041 crore and liquid investment of Rs 4,469 crore as on Sep 30, 2025; along with unutilized bank lines totaling Rs 10,700 crore as of September 30, 2025, providing sufficient coverage for two month's debt obligations, further augmented by anticipated business collections from outstanding advances. While the structural asset and liability management statement for ABCL and ABHFL had negative cumulative mismatches in few buckets up to 1 year as on September 30, 2025, respectively, the same were well-managed by the presence of unutilised bank lines.

ESG Profile

Crisil Ratings believes that ABCL’s Environment, Social, and Governance (ESG) profile supports its already strong credit risk profile.

 

The ESG profile of financial institutions is typically factors in governance as a key differentiator between them. The sector has reasonable social impact because of its substantial employee and customer base, and it can play a key role in promoting financial inclusion. While the sector does not have a direct adverse environmental impact, the lending decisions may have a bearing on environment and other sustainability related factors.

 

ABCL has demonstrated an ongoing focus on strengthening various aspects of its ESG profile.

 

ABCL’s key ESG highlights:

• Aditya Birla Group has committed to achieving net zero by 2050, eliminating landfill contributions, and ensuring zero harm in the workplace, and as a part of this group, ABCL is dedicated to these goals. The company is enhancing transparency and trust through a robust governance mechanism and is investing in carbon neutrality by increasing renewable resource consumption. ABCL is purchasing green energy for its two largest corporate offices and continuously expanding its solar panel capacity across its branches, which reached 340.55 kilowatt by the end of fiscal 2025.
• ABCL has taken the initiative for the disposal and recycling of a total of 23,764 kg of waste from all its branches and offices, encompassing e-waste—disposed of in accordance with applicable laws—along with dry waste and biomedical waste.
• The share of women in the company’s workforce was 33% as on March 31, 2025, in line with the previous year. It has also launched various initiatives to improve the representation of women in leadership positions and create a level-playing field for women employees.
• The company’s governance structure is characterized by the majority of the independent directors (50%) on the board, separate chairman and CEO positions. ABCL has a dedicated investor-grievance redressal mechanism and extensive financial disclosure.
   

There is growing importance of ESG among investors and lenders. ABCL’s commitment to ESG will play a key role in enhancing stakeholder confidence, given high share of foreign investors as well as access to both domestic and foreign capital markets.

Outlook Stable

Crisil Ratings believes that ABCL and financial services businesses will remain strategically important for Grasim (and promoter group entities). Furthermore, ABCL is expected to maintain its diversified presence across the financial services space, comfortable capital position and diversified resource profile.

Rating sensitivity factors

Downward factors

• Weakening in Grasim’s credit risk profile by one notch could lead to a similar rating change
• Any material change in support stance, strategic importance of the financial services business and/or the shareholding of the promoter going below majority
• Deterioration in asset quality, thereby significantly impacting profitability and capital position.

About the Company

ABCL is registered with the Reserve Bank of India as NBFC-ICC, and carrier out the lending businesses for the ABG and also hold investments in various financial services entities of ABG. Prior to April 01, 2025, which is when the scheme of amalgamation of ABFL with ABCL became effective, it was a non-operating holding company with NBFC- CIC license.

 

ABCL provides end-to-end financial services to both retail and corporate customers and has a presence across life insurance, asset management, corporate lending, personal & consumer lending structured finance, project finance, wealth management, security broking, online personal finance management, housing finance, pension fund management and health insurance businesses. ABCL has about 63,750 employees and a nation-wide reach through 1,712 branches and more than 200,000 plus agents/channel partners as on September 30, 2025.

 

ABCL, on consolidated level, reported profit after tax (PAT) of Rs 1,733 crore on total income of Rs 20,140 crore in first half of fiscal 2026 compared to Rs 3,410 crore on total income of Rs 40,724 crore, respectively, for the previous fiscal 2025.

 

On standalone basis, ABCL reported PAT of Rs 2,957 crore on total income of Rs 15,270 crore for fiscal 2025, against PAT of Rs 2221 crore on total income of Rs 12,764 crore for the previous fiscal. For first half of fiscal 2026, it reported a PAT of Rs 1592 crore on total income of Rs 8566 crore.

About erstwhile ABFL

The NBFC had an AUM of Rs 1,26,351 crore as on March 31, 2025 (Rs 1,05,639 crore as on March 31, 2024), with personal and consumer loans, unsecured business, secured business, and mid-market and corporate financing segments forming 12%, 10%, 46% and 32% share of AUM, respectively. Apart from providing a bouquet of lending solutions across a wide range of asset classes and customer segments, it also provides wealth management solutions. It reported a PAT of Rs 2,957 crore on total income of Rs 15,553 crore for fiscal 2025, against Rs 714 crore and Rs 861 crore, respectively, for the previous fiscal. For the first six months of fiscal 2026, it reported a PAT of Rs 1592 crore on total income of Rs 8566 crore.

Key Financial Indicators (ABCL consolidated) 

As on / for the year end		Sep-25	2025	2024	2023
Total income	Rs crore	20,140	40,724	34,561	30,201
PAT(excluding MI)	Rs crore	1,690	3,332	3,335	4,796*
Total assets	Rs crore	3,02,372	2,79,061	2,32,102	1,80,754
Gross Stage 3 (erstwhile ABFL)	%	1.7	2.2	2.5	3.1
Gross Stage 3 (ABHFL)	%	0.6	0.7	1.8	3.2
Return on assets	%	1.2	1.3	1.7&	3.0*
Gearing	Times	4.6	4.3	3.8	3.9

&including one time gain of Rs 433 crore from stake sale of AMC business

*including one time gain of Rs 2,739 crore from stake sale of health insurance business

The ratios mentioned in the rationale have been calculated using Crisil Ratings standard methodology

Any other information: Not applicable

Annexure – List of Entities Consolidated

Names of Entities Consolidated	Extent of Consolidation	Rationale for Consolidation
Aditya Birla Capital Ltd	Full	Holding company
Aditya Birla Finance Ltd^	Full	Subsidiary
Aditya Birla Housing Finance Ltd	Full	Subsidiary
Aditya Birla Capital Digital Ltd	Full	Subsidiary
Aditya Birla Financial Shared Services Ltd	Full	Subsidiary
Aditya Birla Stressed Asset AMC Pvt Ltd	Full	Subsidiary
Aditya Birla Trustee Co Pvt Ltd	Full	Subsidiary
Aditya Birla PE Advisors Pvt Ltd	Full	Subsidiary
Aditya Birla ARC Ltd	Full	Subsidiary
Aditya Birla Money Ltd	Full	Subsidiary
Aditya Birla Health Insurance Co Ltd	Partial*	Joint Venture
Aditya Birla Sunlife Insurance Co Ltd	Full	Subsidiary
Aditya Birla Sunlife Pension Fund Management Ltd	Full	Subsidiary
ABARC-AST-008-Trust	Full	Subsidiary
Aditya Birla Sunlife Trustee Pvt Ltd	Partial*	Joint venture
Aditya Birla Wellness Pvt Ltd	Partial*	Joint venture
Aditya Birla Sunlife AMC Ltd	Partial*	Associate
Aditya Birla Sun Life AMC (Mauritius) Ltd	Partial*	Associate
Aditya Birla Sunlife AMC Ltd, Dubai	Partial*	Associate
Aditya Birla Sunlife AMC Pte Ltd	Partial*	Associate

*Equity accounting

^Note: Aditya Birla Finance Limited has got amalgamated with its holding company, Aditya Birla Capital Limited pursuant to scheme of amalgamation effective from April 01, 2025.