Buy Baid Finserv; target of Rs 48: Khambatta Securities

Khambatta Securities' research report on Baid Finserv

Jaipur-headquartered Baid Finserv Limited is an NBFC offering LAP, vehicle financing, and SME loans. The company operates in the states of Rajasthan and Madhya Pradesh through 30 branches. Playing a critical role in the financial sector by extending credit to underserved segments, the NBFC sector's total asset is expected to grow by 18% CAGR from FY20 to FY25. Baid Finserv operates in markets having credit gaps with LAP being its predominant product. Despite the challenges posed by the Covid-19 pandemic, India's economy has shown remarkable resilience with businesses bouncing back strongly since the end of the third wave of Covid in early 2022. India's credit growth outlook is optimistic with credit offtake expected to remain healthy through FY24. The NBFC sector has been one of the key drivers of banks’ credit growth in the recent past, suggesting strong demand for funds from NBFCs for on-lending. With RBI’s benchmark policy rate closing in on its peak for this cycle and demand bouncing back with the resumption of normal business activities following 2 years of slump due to Covid, we expect credit offtake to be healthy, especially in the underserved segments and the unorganised sector.

Outlook

The Baid Finserv stock currently trades at an attractive forward P/B of 2.2x FY25E BVPS. Assigning a target multiple of 3.0x FY25E BVPS, our valuation informs a price target of Rs 48 with an upside potential of 37%, as we initiate coverage on Baid Finserv with a BUY rating.