Aditya Birla Capital Shares Rise 3% As NBFC Arm Enters Gold Loan Business, Plans 1,000 Branches In 3 Years
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The move puts Aditya Birla Capital in direct competition with established gold loan players like Muthoot and Manappuram, coming just months after Poonawalla Fincorp made a similar entry into the space.
Shares of Aditya Birla Capital Ltd rose as much as 3% on Thursday, August 20, after its NBFC arm entered the gold loan business. The company plans to set up about 1,000 dedicated branches for the business over the next three years.
The rollout will be done in phases. Aditya Birla Capital plans to open 200-300 branches by March 2027, mainly across markets it has identified as having strong potential. The branch network will then be expanded to around 1,000 over the next two years.
Aditya Birla Capital Gold Loan Business: What Are The Expansion Plans?
The company will offer gold loans in urban as well as semi-urban markets. The target customers will include people already using products from the Aditya Birla Capital group as well as new borrowers.
The business will use a mix of branches and digital channels. This will allow the company to tap customers through its existing distribution network while also building a separate presence for gold loans.
Rakesh Singh, Executive Director and CEO-NBFC at Aditya Birla Capital, told CNBC-TV18 that the company sees structural growth in gold loans in India. He said entering the segment fits with the company's focus on secured lending.
Aditya Birla Capital is entering the segment at a time when gold lending is seeing increased interest from both NBFCs and banks.
Poonawalla Fincorp entered the gold loan business around four months ago, with a focus on tier-2 and tier-3 cities. Established players in the segment include Muthoot Finance, Manappuram Finance and IIFL Finance. Several private sector banks, including Federal Bank, CSB Bank and South Indian Bank, also offer gold loans.
Gold loan books have grown strongly across several of these lenders. Muthoot Finance reported 44% year-on-year growth in gold loan AUM during the quarter, while Manappuram Finance's gold loan portfolio grew 97%. IIFL Finance reported 114% growth. Federal Bank and CSB Bank recorded growth of 33% and 47%, respectively.
Aditya Birla Capital Q1 FY27 Results Snapshot
The entry into gold loans follows a strong first quarter for Aditya Birla Capital.
Net interest income increased 27.9% year-on-year to Rs 2,377 crore in Q1 FY27. Net profit rose 40% to Rs 1,175 crore from Rs 839 crore in the same quarter last year.
Total business loans stood at Rs 95,099 crore, up 31% year-on-year, while overall assets under management rose 28% to Rs 1.67 lakh crore. Asset quality was broadly stable compared with the previous quarter and improved from a year earlier.
Aditya Birla Capital Share Price
Aditya Birla Capital shares were trading at Rs 407.80, up 2.98%, at the time of writing. The stock has gained nearly 12% so far this year.
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Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
