Buy This Midcap NBFC Stock, Showing 43% Upside Potential, Says Yes Securities

Yes Securities has a Buy on Aptus Value Housing Finance, assigns Rs 350 target price on the stock. The brokerage claims up to 43% upside from its current level considering the given target price. According to the brokerage, robust growth to continue - competition, pricing, management transition and new markets less of an issue.

Aptus Value Housing Finance is a financial sector company working as a Non-Banking Financial Company (NBFC) in the Home Loan industry. It is a midcap NBFC with a market capitalisation of Rs 12,289.82 Crore.

Strong growth/quality at reasonable valuation

According to Yes Securities, Aptus Value Home offers a favourable long-term risk-reward at current valuation (2.7x PABV and 16x PE on FY25E), wherein structural business model positives seem underemphasized. While concerns over stock supply in the longer run are tenable, the apprehensions around management transition and business scalability appear stretched. "We view the appointment of Mr. Balaji as MD (erstwhile ED & CFO) as a non-disruptive development with growth/quality execution fairly verticalized and institutionalized at Aptus, and the likelihood of Mr. Anandan guiding strategy even after current term (ending in Dec'24) by being a Non-executive Chairman. Aptus has demonstrated regional diversification/scalability with comparable asset quality across disparate Southern markets. While existing markets can comfortably support 25-30% growth in coming years, the contiguous and calibrated entry/expansion in new states would aid long run prospects," the brokerage has said.

It added, "Structurally, portfolio spread and opex metric should remain in a narrow band underpinned by benefits from niche positioning, scale, tech investments and credit rating. Aptus' strong customer and property underwriting, and focused collection mechanism gets reflected in low credit cost and GNPLs, and negligible actual loan write-offs. We estimate 27-28% AUM CAGR and 23-24% earnings CAGR over FY23- 26 with RoE crossing 18% in FY26 (without assuming further dividend payouts). At potentially 4-5x leverage in the very long run, Aptus can deliver 22-25% RoE. Reiterate BUY on favourable risk-reward with a 12m PT of Rs350."

Stock Movement

On Wednesday, the shares of Aptus Value Housing Finance ended 0.14% higher at Rs 246.75/share on BSE. Shares declined 0.22% in the past 1 week. In the same period, the Sensex jumped 2.39%.

Share declined 11.16% in the past 1 month, while in the past 3 months, it jumped 3.18%. In the past 6 months, it declined 18.52%. In the past 1 year, it declined 6.55%. It was listed on Aug 24, 2021, on BSE.

The stock traded its 52-week high on Sep 09, 2022, at Rs 366.75/share and 52-week low on Mar 03, 2023, at Rs 234.05/share, respectively.

Disclaimer - The stock has been picked from the brokerage report of Yes Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.