IDBI Capital Initiates Coverage On 3 NBFC Stocks With Buy Rating, Sees High Returns Upto 35%

IDBI Capital initiates coverage on 3 midcap NBFC stocks namely Shriram Finance (SFC), Mahindra & Mahindra Financial Services (MMFS) and Sundaram Finance (SUF) with the BUY rating. The brokerage has estimated an attractive target price for stocks, claiming up to 35% upside from stock's current level. Check below to know:

Shriram Finance (SFC)

IDBI Capital assigns "Buy" on SFC's stock with a target price of Rs 1,730/share. The shares are likely to be given up to 35% return if purchased at the current market price. The stock last traded at Rs 1,289.05/share on NSE. Its market valuation is Rs 48,168.20 crore.

It gained 2.89% in 1 week, and 5.84% in 1 month, respectively. It has given 10.04% positive return in 1 year and 147.38% in 3 years, respectively. However, it has given 16.26% negative return in 5 years.

According to the brokerage, Valuations have been lower off lately as compared to its peers although return ratios (RoA at 3.4% FY23) has been at par or better due to hang over (Stake sale by one of the non-promoter holding) on stock performance. "At CMP, the stock trades at attractive valuations i.e P/ABV at 1.1X FY24E. We initiate coverage on SFC with target price of Rs1,730, valuing at 1.3X FY25E ABV," the brokerage has said.

Mahindra & Mahindra Financial Services (MMFS)

IDBI Capital assigns a "Buy" on the stock of MMFD with a target price of Rs 290/share. If you buy the stock at the current market price, it can fetch up to 22% considering the given target price. The last traded share price of the stock is Rs 239.50/share. Its market valuation is Rs 29,405.61 crore.

The stock gained 5.65% in 1 week and declined 5.69% in 1 month. In 1 year, it gave 40.51% positive return, and in 3 years, it gave 68.01% positive return. In 5 years it gave 50.79% negative return.

According to the brokerage, Valuation has remained range bound (1.2X - 1.7X) due to volatility in financials performance led by impact on asset quality. However with stability expected in asset quality going ahead, we expect rerating of valuation should continue. "We initiate coverage on MMFS with target price of Rs.290, valuing it at 1.9x P/ABV FY25E ABV," the brokerage has said.

Sundaram Finance (SUF)

IDBI Capital assigns a "Buy" on SUF for ga potential gains of up to 13% gains with a target price of Rs 2,645/share. The last traded share price of SUF is Rs 2,354.05/share. Its market valuation is Rs 26,514.94 crore.

The Stock has given 3.37% positive return in 1 month and 1.34% in 1 month, respectively. It has given 15.95% positive return in 1 year. In the past 3 years, it has given 100.65%. It has given 38.14% positive return in 5 years.

According to the brokerage, CV cycle reflects the operational performance of SUF led by better AUM growth, which supports the higher valuations. "At CMP, the stock trades at attractive valuations i.e P/ABV at 3.0X FY24E. We initiate coverage on SUF with target price of Rs2,645, valuing parent business at 3.2x P/ABV FY25 and rest for the subsidiaries," the brokerage has said.

Disclaimer - The stocks have been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.