Profit rose 31.52% despite a third straight quarterly margin decline
Lower tax and higher operating profit lifted earnings, but costs grew faster than revenue sequentially and operating margin slipped to 33.69%.
Filed 04 May 2026, 14:43 IST · Aditya Birla Capital Ltd (ABCAPITAL)
Key takeaways
- Consolidated net profit rose 31.52% year on year, helped by a 9.61-percentage-point decline in the tax rate.
- Operating margin fell 2.35 percentage points sequentially as expenses grew 16.74%, faster than revenue growth of 12.61%.
- The stock gained 4.44% on the first session after the results, versus a 3.86% median absolute move after its last eight results.
Price around the results
Earnings growth accelerated year on year
Aditya Birla Capital reported consolidated Q4FY26 net profit growth of 31.52% year on year, while revenue increased 10.19%. Operating profit grew faster at 19.51%, indicating better operating leverage against the year-ago quarter. The gain in reported profit was also supported by the tax rate falling to 25.31% from 34.92%.
Sequential margin pressure came from faster cost growth
Revenue grew 12.61% sequentially, but expenses increased 16.74%, narrowing operating margin by 2.35 percentage points to 33.69%. Interest expense rose 4.00%, adding to the pressure below operating profit. Other income accounted for 13.27% of pre-tax profit, so part of reported pre-tax earnings came from non-operating income.
Margin has declined for three consecutive quarters
The Q4 margin decline was the third straight sequential fall after the 40.52% recorded in Q1FY26. Even after improving 2.62 percentage points year on year, the company's 33.69% operating margin was 25.72 percentage points below the 59.41% median for 52 Financial Services peers that had reported.
Management targets expansion in individual insurance
Management said it targets 20%+ CAGR in Individual FYP over the next three years while keeping VNB margin above 18%. The company said it plans to improve persistency, expand its agency footprint and reach more bank-partner branches. Management also said it is developing AI and ML capabilities for claims digitisation and adjudication, while FY26 figures included the impact of lost GST input credit and about Rs 5 crore from the new labour code.
The initial stock response was within its historical range
The stock rose 4.44% on the first session after the results and was up 2.16% after five sessions. That response was close to the company's recent pattern: four of the last eight result reactions were positive and the median absolute move was 3.86%. Trading volume on the results session was 2.63 times the reference level.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹13,459 cr | ₹11,952 cr | +12.61% | +10.19% |
| Other income | ₹207 cr | ₹72 cr | +188.35% | -5.52% |
| Expenses | ₹8,924 cr | ₹7,645 cr | +16.74% | +6.00% |
| Operating profit | ₹4,535 cr | ₹4,307 cr | +5.28% | +19.51% |
| Operating margin (%) | 33.69% | 36.04% | — | — |
| Interest | ₹3,101 cr | ₹2,981 cr | +4.00% | +19.95% |
| Depreciation | ₹82 cr | ₹76 cr | +7.45% | +20.22% |
| Profit before tax | ₹1,559 cr | ₹1,322 cr | +17.99% | +14.60% |
| Tax | ₹395 cr | ₹356 cr | +10.92% | -16.93% |
| Net profit | ₹1,165 cr | ₹966 cr | +20.59% | +31.52% |
| EPS (₹) | ₹4.31 | ₹3.62 | +19.06% | +29.82% |
Operating margin of 33.69% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.10% | -0.41% |
| Next session | +4.44% | — |
| 5 sessions | +2.16% | +2.91% |
| 15 sessions | +5.25% | — |
| 30 sessions | +8.19% | — |
Volume on the results session was 2.63× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company targets 20%+ CAGR in Individual FYP over the next three years and VNB margin above 18%.
- The company plans to improve persistency across customer cohorts.
- The company plans to increase its agency footprint to drive growth.
- The company plans to expand its presence across more bank partner branches.
- The company plans to grow traditional products, including protection, in the retail segment.
New products
- ABSLI launched the Param Suraksha Pro product in February 2026.
- ABSLI launched the Index Guaranteed Annuity Plus product in March 2026.
New initiatives
- The company is building AI and ML capabilities for claims digitization and adjudication.
Problems & risks
- FY26 figures include the impact of lost GST input credit and about ₹5 crore from the new labour code.
What to watch
- Whether operating margin holds above 33.69% after its third consecutive sequential decline.
- Whether expense growth slows from 16.74% sequentially relative to revenue growth of 12.61%.
- Progress against management's stated targets of 20%+ Individual FYP CAGR and VNB margin above 18%.