Centrum is bullish on Capital First has recommended buy rating on the stock with a target price of Rs 655 in its research report dated November 29, 2016.
Centrum's research report on Capital First
Post Q1 results, we had a Hold rating on the stock due to its rich valuations (2.9x FY18E ABV). The stock has corrected 16% post Nov. 8, 2016 and offers a good investment opportunity at current valuations of 2.4x FY18E ABV. In the near term the overall business growth is likely to be impacted by the recent demonetization of currency. Also, the asset quality may be weak in the H2FY17. However, with stabilisation of cash flows in the economy, businesses would pick up in a quarter or two. The long term growth is expected to be driven by increasing demand in CFL’s key segments and we expect a loan book CAGR of 33% to Rs 22,409 crore, over FY16-18E. Hence, we remain positive on the stock from long term perspective and recommend Buy at current levels with a target price of Rs 655, valuing the stock at 2.8x its FY18E ABV.
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