Buy AB Capital; target of Rs 220: Emkay Global Financial

Emkay Global Financial's research report on AB Capital

ABCAP posted a good performance in Q3FY24 across its key business segments, with the lending businesses maintaining momentum in the company’s profitable growth journey, the AMC business delivering improved performance amid a favorable environment, and insurance businesses continuing to scale up with diversifying product offerings and distribution. While the company has already cut its BNPL book and plans to take BNPL to near zero and continues to reduce its exposure to the smaller ticket-sized personal loan segments, it aims to focus on the secured portfolio while growing the business loan segment as well. Management has reaffirmed its guidance of doubling the lending book over the next three years. To bake in Q3 developments, we have tweaked our FY24- 26 estimates resulting in a 2-4% increase in our PAT estimates.

Outlook

We reiterate our BUY rating on the stock with a revised Dec-24E TP of Rs220/share, as the operational momentum across the operating businesses remains strong and valuations remain relatively attractive.