Buy Manappuram Stock for 30% Return
The brokerage suggested buying Manappuram stock for a price target of Rs 125 on the stock.
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The brokerage expects assets under management to decline 2.5% quarter-on-quarter and consolidated assets under management to remain flat sequentially. Motilal Oswal factored in a 60 bps QoQ margin expansion and a 50 bps spread expansion in the consolidated loan portfolio.
“Expect credit costs to decline to ~1.3% in 2QFY23 (vs. 1.7% in 1QFY23),” he said in his report. According to Motilal Oswal, investors should pay attention to comments on gold loan demand and asset quality in the MFI and vehicle segments.
Muthoot Finance: Buy for a target price of Rs 1140
Another gold lending stock that the brokerage has recommended is the stock of Muthoot Finance. However, the brokerage isn’t as bullish and sees 11% upside potential in the stock. He recommended a buy call on the stock, with a price target of Rs 1140.
The brokerage estimates that autonomous assets under management will increase by 2% compared to the previous quarter, due to weak demand for gold loans and strong competition from gold lending banks/fintechs. Interestingly, the brokerage estimates a sequential margin expansion of 80 basis points.
It indicates that the CIR should moderate to 33% (compared to the peak of 35% in the previous quarter). “Beware of comments on gold loan demand and margin forecast for FY23,” the brokerage report adds.
Regular income is key
Motilal Oswal said the preferred ideas are a combination of companies that can enjoy consistent profit growth, can tackle larger market size with a long-term growth track and favorable industry structure. as well as inherent moats and where valuations have corrected significantly and offer an attractive risk-reward equation. These are good valuation metrics to have for long-term investors.
The stocks were selected from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the author and the respective brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.