Indian benchmark indices after having lost a great deal to the US Fed tapering call are trading higher in trade on January 28, 2022 ahead of the crucial Union Budget 2022 presentation. Meanwhile, Yes Securities in view of the ongoing results season has recommended a 'Buy' on 1 AMC and another financial concern.
1. Buy Nippon Life India AMC:
For a price target of Rs. 435, implying gains of 29.69% considering LTP of Rs. 335.4 per share.
|Stock||Target price||Last traded price||Potential gains|
|Nippon Life||Rs. 435||Rs. 335.4||29.69%|
Performance of Nippon Life over the December quarter of Fy 22
Revenue at the company inched higher both sequentially as well as on YoY by 3.3% and 26.1%, respectively to Rs. 3,385 million. Nevertheless, lagged on the Quarterly Average AUM by 6%/32% QoQ/YoY. The company expects improvement in equity which was steady at 43% QoQ but gained by 400 bps YoY. Operating margin at the company also registered an increase at 62.7%, gaining both sequentially and on YoY basis.
Brokerage's view on Nippon Asset and valuations
Management reiterated that it expects improved inflows into equity schemes on the back of sharp improvement in performance in the last 6-9 months. The management furtherexplained that NAM has been able to save on cost on the back of a variety of steps. "We maintain 'BUY' rating on NAM with a revised price target of Rs 435", notes the brokerage. The brokerage values Nippon Life India at
28x FY23 P/E for an FY21-24E EPS CAGR of 20%.
About Nippon Life:
This is a mid cap asset management company commanding a market cap of Rs. 20,790 crore. The company's AAUM are at Rs. 280,601.49 Crores (Oct 2021 to Dec 2021 QAAUM) and 151.96 lakhs folios (as on 31st Dec 2021). The company constantly works to deliver innovative product line as well as customer services to augment value to investors.
2. Can Fin Homes:
Yes Securities suggests to 'Buy' Can Fin Homes for a target of Rs. 775 that means potential upside of 25.8% from the current price level of Rs.616.
Q3Fy22 performance of Can Fin Homes:
The housing finance company logged remarkable quarter posting growth acceleration of 20% YoY, improvement in NIM as well as reduction in NPLs to pre‐pandemic level. Disbursements at the entity are also registering growth. With collection efficiency, better than pre‐Covid level, negligible impact from RBI circular, likely continuance of NPL recoveries and assessment of low slippages (7‐10%) from OTR pool, the credit cost is estimated to remain modest.
Brokerage's take on the company:
Can Fin's Q3 FY22 performance provides clarity on growth and margin trajectory. The brokerage's visits had revealed no material compromise on the quality of new business (in terms of credit score, occupation mix and sourcing mix) not withstanding co.'s higher housing loan rates. "Return of growth and preservation of strong profitability should re‐rate valuation (stock trades at 1.9x FY24 P/ABV). Current 1‐yr rolling fwd. P/ABV multiple stands well below the 5‐year average", notes the company.
The above stocks are taken from the brokerage report of Yes Securities. Investing in equities poses risk of financial loss. Readers should not construe the story as an investment advice in these stocks.