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ABHF Targets 15% ROE with AI, Expansion
14 Sep
Summary
- AUM target of Rs 1 lakh crore set for next 2-2.5 years.
- Company plans to add at least 100 new branches this year.
- AI is actively used in 13 live use cases across operations.
Aditya Birla Housing Finance (ABHF) is strategically poised for significant expansion, targeting Rs 1 lakh crore in Assets Under Management (AUM) within the next 8-10 quarters. This ambitious growth plan, representing a 25-40% compound annual growth rate, is underpinned by a commitment to maintaining asset quality and improving profitability, with a projected Return on Equity (ROE) of 15% and Return on Assets (ROA) of 2.4%.
To achieve this scale, ABHF is actively increasing its capacity and market presence. The company intends to add at least 100 new branches to its existing 209 points of sale this year, bolstering its workforce with approximately 1,000 new employees. A recent capital infusion of Rs 2,750 crore from Advent International is expected to sufficiently fund operations for the next 18-24 months.
ABHF maintains a full-stack player strategy across prime, affordable, and construction finance segments, with no significant shifts expected in the current portfolio mix. However, the company anticipates an increase in the lowest-ticket informal-income segment within affordable housing from 6% to 11% of the portfolio over the next 8-10 quarters.
Artificial Intelligence (AI) is a pivotal element in ABHF's strategy to enhance productivity and operational efficiency. With 13 AI use cases already live, spanning acquisition to customer service, the company aims to reduce its cost-to-loan-book ratio from the current 2.21% to 1.7% within 8-10 quarters. This digital transformation mirrors group-wide AI adoption, which has yielded substantial efficiency gains in insurance and mutual fund operations.
