Buy Capital First;target of Rs 480: Axis Securities

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Axis Securities's research report on Capital FirstCapital First’s (CAFL) Q3FY16 PAT at Rs 445 mn (+49% YoY) was led by strong NII growth (+53% YoY). NIM (calc. improved 38 bps QoQ to 7.8%, largely driven by increase in yields (30 bps QoQ), which is on account of higher incremental disbursement in high yielding segments. We factor in ~30 bps improvement in margin over FY18 on the backdrop of decline in cost of funds aided by moderation in base rate of the banks (~65 borrowing is from banks). AUM growth was strong at 28% YoY at Rs 150 bn, primarily contributed by retail segment (up 30% YoY and forms 85% of total AUM). Headline asset quality was largely stable with GNPLs (150 dpd) at 0.9% (up 3 bps QoQ). We factor in ~28% CAGR loan growth over FY18 and do not expect significant deterioration in asset quality.Capital First is one of our preferred bets in the consumer lending space with calibrated growth rates, further room for margin expansion along with operating leverage aiding in expansion of return ratios. However, expanding retail book will require investments in technology and manpower that may take few quarters to yield positive results. At CMP of Rs 396, CAFL trades at 2.2x FY16E and 2.0x FY17E ABV of Rs 180 and Rs 196. We retain our BUY rating on Capital First with TP of Rs 480 (upside of 21% from CMP).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More