December 01, 2016 / 13:07 IST
Consumer & SME financing will sustain strong demand and continue to drive loan growth. Loan book grew at robust 32% YoY in H1FY17, aided by consumer durable and SME financing. Factoring a nominal impact from the unexpected de-monetisation drive on SME in the medium term, we moderate our FY17E loan book estimate by -13%. We still continue to factor healthy 30% CAGR in loan book over FY16-18E.
FY17E & FY18E book value estimates have increased by 13% & 8% factoring the proposed Rs 340 cr preferential equity issue at Rs 702/share. CAPF is currently trading at one year forward Adj. P/B of 2.1x, 6% discount to last one year average. Factoring headwinds from de-monetisation on earnings, we reduce our valuation to 2.5x FY18E adjusted book value with a revised target price of Rs 635, while upgrade to Buy.
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