Centrum Advises To Buy Paisalo Digital On The Grounds of The Strong Technical Breakout; Target?

A leading stock brokerage firm, Centrum, has recommended investors purchase the small-cap stock Paisalo Digital on the grounds of the strong technical breakout. On the daily chart, the stock price has moved above its double-bottom pattern and has regained the 50-day moving average (50-DMA) now at Rs 50.60, which is a good sign for the price.

For Centrum, the reversal of the negative structure of Paisalo Digital was confirmed by the lack of formation of lower top and lower bottom. Moreover, momentum indicators and oscillators are all bullish on both the daily and weekly charts. As a result, Centrum envisages a target of Rs 58 and a forsake over Rs 49.50.

On Monday, Paisalo Digital opened with a gap up of Rs 55.01 which means the previous closing of Rs 51.21 has increased by 7%. The highest share price was noted in this session as Rs 55.39 revealing a shareholder gain of 8.16 per cent. The stock has traded over the last year at a high of Rs 99.63 anda low of Rs 40.15 which is a recovery of 29 percent from the latter.

Further strengthening investor confidence, the non-banking financial company (NBFC) has recently revealed plans to raise funds through secured Foreign Currency Convertible Bonds (FCCBs).7.5% FCCBs with a total of USD 75 million, approximately Rs 633.53 crore at Rs 84.47 per USD have been authorized by the board. These bonds will be issued in accordance with the Reserve Bank of India's external commercial borrowing (ECB) policies and will come due in 5 years.

FCCBs are foreign currency-denominated debt securities with regular coupon and principal payments made in the same denomination which can be converted into equity. This is expected to improve the liquidity level of the company and improve its operational capabilities.

So far, Paisalo Digital has been reporting healthy financials considering its market cap which is over Rs 4,500 crores, is quite large. In fact, in Sep 2024 its promoters raised their stake to 52.38 percent from 51.66 percent consisting of the purchase of 45,19,710 shares in June 2024.

Established in 1992, Paisalo Digital Ltd is a non-deposit-taking NBFC with branches in Delhi and Agra. The company assists individuals and firms with products that promote advancement like business, SME & MSME, and self-employment income-generating loans. There is a good institutional holding in the company as well, which includes SBI Life Insurance Co.

The ownership structure includes 9.92% held by Dharnendra Investments Ltd, 1.23% by the State Bank of India, and 1.35% by LIC of India. Such investments further strengthen the firm's dominant position and growth opportunities.

Paisalo Digital has strong attributes of having a good technical setup, and equity fundraising efforts recently, and the promoters seem confident of the growth, making the Company stand out in the financial services space. Thus, an opportunity for the investors to opt for.