Axis Direct is bullish on Capital First has recommended buy rating on the stock with a target price of Rs 920 in its research report dated October 09, 2017.
Axis Direct's research report on Capital First
We recently interacted with the management of Capital First (CAFL) to get insights of the business and the way forward. The management aims ~25% AUM growth in each of the next two years backed by strong growth in retail financing. CAFL is witnessing strong traction in two wheelers, consumer durables and business loans while it is adopting a softer stance towards loan against property book (share likely to go down to ~35% by FY19 from current ~45%).Outlook
Added focus on higher-yielding assets and realigning liability mix can improve core NIM by ~50-100 bps by FY19. Expect GNPAs/NNPAs to stay under 2%/1% going forward while C/I ratio is expected to decline to <50% by FY19 due to improvement in top line, increasing productivity, and operating leverage. CAFL is trading at 2.6x FY19E P/ABV. Maintain BUY.
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