ICICI Direct Places Buy On 4 Large Cap NBFC Stocks For Potential Upside

Leading brokerage firm Motilal Oswal has come up with a "Buy" rating on 4 large-cap NBFC stocks. The firm in its recent March 2023 Results Preview report on Financial -NBFCs listed Bajaj Finance, Shriram Finance, Cholamandalam Investments and Finance, and Housing Development Finance Corporation (HDFC) with attractive valuations for high returns. Check below to know more:

Bajaj Finance

Motilal Oswal estimated a target price of Rs 6700/share for the stock, claims 13% potential upside from its last closing price. The last closing price of the stock is Rs 5932.20/share, up 2.97% from the previous close.

The stock gains 5.46% in 1 week, however, it declines 3.3% in 1 month. It declines 19.26% in 1 year. Whereas, in 3 years it gains 168.73% and in 5 years it gans 206.16%.

According to the brokerage, Estimate AUM growth of 26% YoY/ 8% QoQ. Opex is expected to remain elevated with CIR at 34%. Margins and spreads expected to decline ~30bp QoQ. Credit costs expected to decline ~10bp QoQ in 4QFY23.

Housing Development Finance Corporation (HDFC)

Motilal Oswal places "Buy" on HDFC with a target price of Rs 3070/share for gains up to 13% gains. The stock last traded at Rs 2,729.30/share on NSE.

It gains 4.85% in 1 week, and 2.04% in 1 month, respectively. In 1 year it gains 7.62%. In 3 years it gave the highest 82.01% return. In 5 years it gave 49.22% return.

According to the brokerage, AUM growth is likely to be healthy at ~13% YoY. PPOP to grow ~7% YoY and estimate credit cost at ~25bp. Estimate margins to remain largely stable sequentially. Outlook on margins, home loan demand, and asset quality in the non-individual segment are key monitorables.

Shriram Finance

Motilal Oswal estimates a target price of Rs 1600/share with a "Buy" rating. The stock is likely to give up to 23% gains if purchased at the current market price. The stock's last closing price on NSE is Rs 1303.85/share.

The stock gains 4.16% in 1 week and 4.57% in 1 month, respectively. Stock gains 11.72% in 1 year. In 3 years it gave 150.43% positive return, however, in 5 years it gave 17.76% negative return.

According to the brokerage, Estimate disbursements of ~INR307b, leading to AUM of ~INR1.8t (up 16% YoY/ ~3% QoQ). Credit costs are expected to decline to 1.9% in 4QFY23 (v/s 2.1% in 3QFY23). Margins estimated to decline ~10bp sequentially. Commentaries on loan growth and asset quality in the CV, MSME, 2W, and PL segments are the key monitorables.

Cholamandalam Investments and Finance

Motilal Oswal assigns "buy" on the stock with a target price of Rs 6700/share, claims up to 10% gains if purchased at the current market price. The stock's last closing price is Rs 841.40/share, up 7.51% compared to the previous close.

The stock gained 12.51% in 1 week and 9.37% in 1 month, respectively. Stock gave 19.73% positive return in 1 year. In 3 years it gave 575.01% positive return, and in 5 years, it gave 176.04% positive return.

According to the brokerage, Estimate Business AUM to grow 34% YoY. Asset quality to improve with GS3 decline of ~40bp sequentially. Margins are expected to contract by ~20bp QoQ. Guidance on loan growth and margins to be closely monitored.

Disclaimer - The stocks have been picked from the brokerage reports of Motilal Oswal. 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.