L&T Finance Holdings: Buy with a price target of Rs 110
The brokerage has placed a buy call on the stock of L&T Finance Holdings, with a price target of Rs 110 on the stock, which implies gains of nearly 30% from current levels of Rs 84.
According to the brokerage L&T Finance Holdings is near the bottom in terms of consolidation of its loan book and should start exhibiting loan growth in 2HFY22. NPA recognition of a large Real Estate account will remove an overhang of potential asset quality stress and allow L&T Finance Holdings to work towards its resolution. We are now factoring in a 7%/11% loan growth in FY23E/FY24E and have upgraded our FY23-24E EPS estimate by 6-9%. We maintain our Buy rating with a target price of Rs 110 per share (1.2x Sep 23E consolidated book value per share),” the brokerage has said.
L&T Finance Holdings: Strong Disbursements
Disbursements of the company increased by 3% YoY (up 40% QoQ on a low base) to Rs 73.4 billion, led by Rural Finance, which constitutes 68% of total disbursements.
“Despite both the Tractor and 2W industries declining by 11-12% YoY, L&T Finance Holdings maintained its market share and delivered the highest ever 2Q disbursements in both segments. The MFI segment saw a sharp recovery in disbursements in Sep’21, with a focus on existing customers,” the brokerage has said.
Buy LIC Housing Finance stock
Motilal Oswal Institutional Equities has a buy call on the stock of LIC Housing Finance. According to the brokerage, the firm has completed a preferential allotment of equity to its promoter LIC in 2QFY22, after an independent third-party valuation.
“Despite a QoQ improvement in asset quality, credit costs were elevated, driven by an improvement in Stage 3 PCR. While ~33% of the Wholesale book has been restructured, it will be interesting to understand Stage 3 trends in the Developer book and whether there have been any new slippages/resolutions on that front. Margin has bottomed out and should improve, barring any one-off impacts on interest income. We will look to revise our estimates post the earnings call on 22nd Oct’21,” the brokerage has said.
The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
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