Arihant Capital has given Buy recommendation for Indostar Capital Finance with a target price of Rs. 414 in its research report issued on Feb 14, 2022

Arihant Capital’s research report on Indostar Capital Finance

Indostar Capital Finance (Indostar) has posted healthy performance during Q3FY22 in terms of disbursements growth, margin expansion and on operational front. However, profit of the company de-grew by 40% YoY to INR 15 cr was lower than our estimate of INR 51 cr on account of sequential increase in credit cost. Provision expense for the quarter stood at INR 43 cr vs. provision write back of INR 3 cr in the previous quarter. Disbursements momentum of the company continues to be strong with highest ever single quarter disbursements of INR 1,480 cr, driven by CV and Housing finance. In line with company’s retailisation strategy, retail loan share has increased further to 81% from 80% QoQ.

Outlook

Hence, we expect credit cost to normalize. We reduce our FY22E PAT by 31% to factor in higher credit cost. We maintain Buy rating on the stock with a revised TP of INR 414 (based on 1.2x FY24E P/ABV).

More Info on Trent

At 15:46 hrs Indostar Capital Finance was quoting at Rs 248.90, up Rs 5.10, or 2.09 percent.

It has touched an intraday high of Rs 251.65 and an intraday low of Rs 236.95.

It was trading with volumes of 8,248 shares, compared to its thirty day average of 15,788 shares, a decrease of -47.76 percent.

In the previous trading session, the share closed down 6.55 percent or Rs 17.10 at Rs 243.80.

The share touched its 52-week high Rs 416.95 and 52-week low Rs 228.25 on 11 June, 2021 and 27 December, 2021, respectively.

Currently, it is trading 40.3 percent below its 52-week high and 9.05 percent above its 52-week low.

Market capitalisation stands at Rs 3,387.01 crore.

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