Target: ₹160CMP: ₹124.50Fedbank Financial Services’ (Fedfina) Q1-FY25 PAT of ₹70 crore grew by 30 per cent y-o-y and 3.8 per cent q-o-q. Credit costs on AUM were higher at 111 bps, up 49 bps q-o-q due to seasonality (challenging collection environment), delinquencies in the mortgage segment and one offs (impact of 12bps). If this was a late lifecycle NBFC with a steady-state RoE of 15-16 per cent, we would have used a target multiple of 1.8x. Accordingly, our target multiple is 2x which when applied to Q4-FY26 BVPS leads to a target price of ₹160 (rounded off). Most upside risks in this business relate to an even higher-than-estimated AUM growth trajectory.

Source: The Hindu July 22, 2024 16:28 UTC