Buy Poonawalla Fincorp; target of Rs 455: KR Choksey

KR Choksey is bullish on Poonawalla Fincorp has recommended buy rating on the stock with a target price of Rs 455 in its research report dated July 26, 2024.

Broker Research

July 26, 2024 / 15:26 IST

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KR Choksey's research report on Poonawalla Fincorp

Net Interest Income (NII) for Q1FY25 increased by 36.8% YoY (+2.4% QoQ) to INR 5,761 Mn. NII growth was 4.0% lower than our estimates due to lower-than-expected AUM yields. Pre-Provision Operating Profit (PPOP) stood at INR 4,321 Mn, growing 46.9% YoY (+5.6% QoQ) in Q1FY25. The PPOP was 4.0% lower than our estimates owing to the lower NII. The Profit after tax for Q1FY25 has reported a growth of 45.7% YoY (-12.1% QoQ) to INR 2,916 Mn. The sequential decline in net profit was on the back of higher provisions of INR 425 Mn as against INR 239 Mn in Q4FY24. The net profit was lower than our estimates by 4.1%.

Outlook

We assign a P/ABV multiple of 3.3x (earlier 4.0x) to FY26E ABVPS of INR 137.5 per share and revise our target price to INR 455/share (Previous target: INR 555). This implies a potential upside of 24.4% and accordingly, we have retained our “BUY” rating for Poonawalla Fincorp Ltd.

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