Aditya Birla Capital extends rally on credit ratings upgrade of arms

The stock rallied 8% to Rs 210, extending its 9% gain in past two trading sessions on the BSE on back of heavy volumes.

Shares of Aditya Birla Capital rallied 8% to Rs 210, extending its two-session long rally of  9% after the company said the rating agency India Ratings and Research (Ind-Ra) has upgraded the long-term issuer rating of its subsidiaries - Aditya Birla Finance Limited (ABFL) and Aditya Birla Housing Finance Limited (ABHFL) – with a stable outlook.

The counter has seen huge activities with trading volumes surging more than three-fold today. A combined 18.51 million shares changed hands till 12:45 AM as compared to its two-week average of sub 6.1 million shares on the BSE and NSE.

Ind-Ra has upgraded ABFL’s and ABHFL’s long-term issuer rating to ‘IND AAA’ from ‘IND AA+’ with a stable outlook and affirmed the short-term issuer rating at ‘IND A1+’.

“The upgrade factors in the increasing importance of financial services to Grasim Industries and the larger Aditya Birla group franchise from a long term perspective. ABFL continues to be a high growth business, though its share in the consolidated balance sheet and profitability of the ultimate parent and the group is modest at present,” Ind-Ra said in a release.

Ind-Ra understands that financial services remains a strong focus area for the Aditya Birla Group and has a close oversight from the top management, increasing the likelihood of active support, in the event of liquidity tightness or even through timely availability of growth capital, as and when required.

ABFL has created a sizeable franchise in the non-banking financial services domain with a fairly diversified portfolio across segments. While ABHFL’s current franchise remains modest, it complements the group’s philosophy of providing complete product suits in the financial services segment, it added.