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Nuvama Bullish On Midcap NBFC Stock, Buy For 35% Gains, Trading Near 52-Week Low
Leading broking firm Nuvama initiates coverage on Home First Finance Company India Ltd. (HFFC) with a Buy. The brokerage remains bullish on the stock, it sees a 35% potential upside from its current level.
HFFC is a Financial sector stock, operating as NBFC (Non-Banking Finance Company) - Home Finance Company. It is a midcap stock with a market capitalisation of Rs. 6,103.32 crore.
Strong growth momentum; asset quality improves
According to the brokerage firm, NII for HFFC came in lower than our estimate in Q4FY23 due to higher than expected NIM compression, although strong other income led to a broadly in line net revenue (NR), PPOP, and PAT. AUM growth was also in line at 34% YoY and 7% QoQ as quarterly disbursements were at an all-time high of INR869cr.
The improvement in asset quality continued, with GS-3/NS-3 improving 18bp each QoQ to 1.6%/1.1%. Early warning indicators such as 1+ dpd and 30+ dpd improved sequentially and are approaching pre-COVID levels. The bounce rate declined in Q4FY23 to 13.6% (although it increased to 14.6% in April).
Buy for a target price of Rs. 930/share
Nuvama Said, "The management reiterated its AUM growth guidance of 30% and expects to cross the INR10,000cr AUM mark over the next 15-18 months. They remain confident of maintaining spread at or above 5.25%. We expect ~30% AUM CAGR over FY23-25 and RoAE of ~16.7% by FY25. We reiterate 'BUY' with a TP of INR930."
Stock Outlook
The last traded share price of HFFC is Rs.693.45/share, down 1.85% from its previous close of Rs. 706.55/share. It traded the 52-week high at Rs. 1,004.55/share and 52 week low at Rs. 652/share, respectively. Stock is trading 6.36% down from its 52 week low.
It has fallen 2.67% in 1 week, and 2.5% in 1 month, respectively. It has fallen 12.33% in the past 1 year. Since its listing date, it has given 31.45% positive return. It was listed on 3 February 2021.
Disclaimer - The stock has been picked from the brokerage report of Nuvama. 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.
