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Epic Research
IndoStar Capital Finance (Buy)
CMP: ₹328.75
Target: ₹430
IndoStar Capital Finance is an India-based non-deposit accepting non-banking financial company (NBFC). The company is engaged in providing financing solutions to corporate and loans to small and medium enterprise (SME) borrowers. It offers vehicle finance and housing finance products. It operates four lines of business, namely corporate lending, SME lending, vehicle financing and housing financing.
IndoStar Capital Finance was majorly a corporate lender and has recently forayed into retail Segment. It has made significant expansion in retail infrastructure and has focussed on each vertical as a separate profit-making entity.
IndoStar has recently picked up IIFL commercial vehicle business which will change its AUM book to 60 per cent retail and 40 per cent corporate. Despite the recent credit issues in debt market and expansion in retail infrastructure company has managed to do well and improved its margin.
Though it has limited financial history due to recent listing but the valuation metrics look rewarding and make it a suitable pick for long-term investment.
We recommend buying stock at current levels for target of ₹430 valuing it at 13x of FY20 earnings and at par with BV.
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