Buy Indostar Capital Finance; target of Rs 245: Motilal Oswal

Motilal Oswal's research report on Indostar Capital Finance

Indostar Capital Finance (Indostar) reported an improvement in business momentum during the quarter. The key highlights: 1) 3QFY24 disbursements rose ~6% QoQ to ~INR13.5b; 2) it invested in human capital (added 185 employees in 3Q, taking the total count to ~3,700); 3) the CV segment contributed ~83% to the retail disbursement mix; and 4) asset quality improved with GS3 declining ~140bp QoQ (including sell-downs in SME).

Outlook

With better visibility on disbursement momentum, we estimate 34%/19% AUM/PAT CAGR over FY23-26, aided by healthy NIM (7.0-7.2%) and benign credit costs (~1.2%) over FY25-26. Reiterate BUY with a TP of INR245 (premised on 0.9x FY26E BVPS).

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