Buy Capital First with a target of Rs 635: Geojit BNP Paribas Financial Services

Geojit BNP Paribas Financial Services has a buy call on Capital First Ltd. with a target price of Rs 635. The current market price of Capital First Ltd. is Rs 532.75. Time period given by the analyst is a year when Capital First Ltd. price can reach defined target. Capital first Ltd (CAPF), an NBFC engaged in mortgage financing to MSMEs, consumer durable loans and wholesale credit saw earnings maintain healthy momentum in H1FY17 on the back of strong loan growth at 32% YoY. Net interest income (NII) & PAT grew at healthy 71% YoY & 45%YoY respectively while margins expanded +164bpsYoY. Despite, short-term headwinds on SME from unexpected de-monetization, Geojit BNP Paribas Financial factors healthy 30% CAGR in loan book over FY16-18E. Lower cost of funds and better interest yields on improving mix of high yielding consumer durable portfolio will lead to healthy improvement in profitability.