BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Retail Research
IIFL Securities Ltd. is one of the key capital market players in the Indian financial services space. The company provides a full suite of products and services.
It offers equities (both cash and derivatives), commodities, and currency broking for both retail and institutional clients. Its financial products distribution division offers a wide range of products like mutual funds, insurance, IPOs, bonds, alternative investment fund, and others, targeting retail and high net-worth individuals clients.
It also has an investment banking division. The company is also constantly investing in technology and launching new innovative products to remain competitive with discount brokerages.
The buoyant equity markets have resulted in strong growth in Investment Banking and financial products distribution revenue. Sale of its real estate assets could bring in further capital to invest in the financial services business.
We believe the equity markets are likely to remain strong in the near term driving higher revenues and profitability for IIFL Securities.
We remain bullish about the near to mid-term prospects of the company owing to strong tailwinds across all capital market businesses.
The stock is trading at a lower valuation as compared to its peers which we expect to narrow. We have envisaged 13% compound annual growth rate in topline and 18% in bottomline over FY23-FY25E.
We believe investors can buy the stock in the band of Rs 88-90 and add on dips in Rs 79-81 band (seven times FY25E earnings per share) for a base case fair value of Rs 97 (8.5 times FY25E EPS) and bull case fair value of Rs 108 (9.5 times FY25E EPS) over the next two-three quarters.
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