Increased Retail Focus Gets Capital First Its 12th Buy Rating

Angel Broking rated Capital First Ltd. a new ‘Buy', citing the lender's sustained focus towards becoming a diversified retail financier from a wholesale centric. That helped the Mumbai-based company reduce its bad loans and raise assets under management, the brokerage said.

It pegged its 12-month target price at Rs 850, implying a potential upside of over 30 percent from Monday's close.

Before Angel Broking, 11 analysts recommended ‘Buy', two recommended ‘Hold' and none of them had a ‘Sell' rating. The stock is currently 25 percent below the Bloomberg consensus one-year target price.

Here's what the brokerage said on the company:

• Retail loans rose 35 percent whereas wholesale loans fell 8.2 percent over five financial years up to 2017.
• Capital First to clock a compounded annual growth rate of 23.3 percent over financial years 2017 to 2020.
• Given an improving loan mix and an expansion in net interest margin, earnings would increase at a CAGR of 32 percent over the same period.
• The gross non-performing assets was shrunk by 3.7 percent, down to only 1.6 percent in the quarter gone-by, in a span of seven years.
• With increased focus towards retail financing, the NBFC increased its share of consumer durable and two-wheeler financing from 13 and 10 percent to 16 and 17 percent, respectively by March 2019.