Buy Poonawalla Fincorp, target price Rs 265: ICICI Securities

ICICI Securities has buy call on Poonawalla Fincorp with a target price of Rs 265. The current market price of Magma Fincorp Ltd. is Rs 189.85.

Time period given by analyst is one year when Magma Fincorp Ltd. price can reach defined target.

Poonawalla Fincorp Ltd., incorporated in the year 1978, is a Small Cap company (having a market cap of Rs 14415.46 Crore) operating in NBFC sector.


Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 483.19 Crore, down -17.70 % from last quarter Total Income of Rs 587.14 Crore and down -15.21 % from last year same quarter Total Income of Rs 569.90 Crore. Company reported net profit after tax of Rs 60.08 Crore in latest quarter.

Investment Rationale
Business transformation is clearly underway with: 1) leadership team being strengthened; 2) product suite being realigned for better risk-adjusted returns; 3) credit policies being revised; and 4) risk management, data analytics and digital capabilities being scaled up. Incremental triggers will be in improved credit rating outlook due to well-capitalised balance sheet and strong parentage. High probability of enhanced operating metrics and return profile in the medium term can help the stock command 2.75x book value. It revises 2-year target price to Rs265 (previously: Rs173).

Promoter/FII Holdings
Promoters held 73.2 per cent stake in the company as of June 30, 2021, while FIIs held 8.7 per cent, DIIs 15 per cent and public and other 11.8 per cent.