RBS on Aditya Birla Nuvo

RBS initiates coverage on Aditya Birla Nuvo with a `Buy’ rating and target price of Rs 1,050 per share. ABNL has a presence in a wide range of financial services, such as life insurance, asset management, non-banking financial services, wealth management, retail broking, private equity and insurance advisory. Birla Sun Life Insurance is the sixth-largest private life insurance company in India based on April-January ‘10 weighted new received premiums. Birla Sun Life Mutual Fund is the fifth-largest asset management company, with about Rs 68,100 crore of assets under management. The gross domestic savings rate increased from 23% in FY01 to 32.5% in FY09, with household financial savings forming a large part of that.

In addition, about 61% of the population is of working age. The target price is made up of:

1) the financial services group (insurance, asset management company and the listed AB Money Ltd)

2) the telecom business; and

3) the manufacturing businesses. Recently, the government announced its intent to consider giving banking licence to the private sector and NBFCs, subject to RBI approval. ABNL’s management has said that the group will apply for one.