Indostar Capital Finance Q1 Review - Disbursement Momentum Better; Asset Quality Improving: Motilal Oswal

Motilal Oswal Report

Indostar Capital Finance Ltd. has strategically prioritised the expansion of its loan book in the used commercial vehicle and affordable housing finance segments.

It anticipates that a strengthened management team, enhanced processes, and a favorable economic climate will serve as catalysts for growth in these segments.

While the corporate book will continue to run down, we expect the retail book to see strong growth from hereon. It has made conservative provisions on stressed loans and we expect credit costs at ~1.2-1.7% over the next two years.

Over the last two quarters, Indostar has made some sound business decisions, which can help this franchise make a turnaround. Risk-reward is favorable at 0.65 times FY25E price/book-value.

We have a 'Buy' rating on the stock with a target price of Rs 195 (premised on 0.8 times FY25E book value per share).

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