Buy ICRA, target price Rs 4195: HDFC Securities

HDFC Securities has buy call on ICRA with a target price of Rs 4195. The current market price of ICRA is Rs 3724.
Time period given by analyst is six months when ICRA Ltd. price can reach defined target.

ICRA Ltd., incorporated in the year 1991, is a Mid Cap company (having a market cap of Rs 3605.27 Crore) operating in Financial Services sector.


ICRA Ltd. key Products/Revenue Segments include Income From Rating Services and Other Operating Revenue for the year ending 31-Mar-2021.

Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 95.55 Crore, up 2.41 % from last quarter Total Income of Rs 93.30 Crore and up 7.67 % from last year same quarter Total Income of Rs 88.74 Crore. Company reported net profit after tax of Rs 31.09 Crore in latest quarter.

Investment Rationale
ICRA is well placed to benefit from the revival in credit growth. The brokerage expects ICRA’s revenue/EBITDA/PAT to grow at 13/21/21% CAGR over FY21-FY24, led by demand revival in credit growth and strong uptick in outsourced business. ICRA has healthy cash and cash equivalents (FY24) on books equivalent to 19.5% of its CMP. It believes investors can buy the stock in the band of Rs 3720-3750 and add on dips to Rs 3350-3380 band (22.5x FY24E EPS) for a fair value of Rs 4195 (28x FY24E EPS) over the next 2 quarters.

Promoter/FII Holdings
Promoters held 51.87 per cent stake in the company as of 31-Dec-2021, while FIIs owned 8.18 per cent, DIIs 29.06 per cent.