"ABFRL" a good buy for Long term!
Despite Covid'19 disruptions in Jan'22, ABFRL reported healthy revenue and margin growth in Q4 FY22.
ABRL looks good for long term due to following aspects:
• Its FY22 performance was good on the back of easing Covid'19 restrictions, investments in network expansion, inorganic acquisitions and e-commerce
• Focusing on long-term strengthening of its balance sheet so that its expansion over the next 3-5 years is not hampered, it approved raising Rs. 22bn through a primary issue to GIC
• It plans to use this capital to accelerate its growth engine built around its current brands.
• ABFRL's could reduce it's FY23e/24e capex to ~Rs. 6.5-7bn, and, hence it's revenue assumption 6%/10% over FY23/24.
• Many brokerage houses are reducing their FY23e/24e EBITDA margin to 15%/15.3% as they factor in more marketing spends, higher other overheads and investments.
Final View:
• I believe that we need to factor in revenue/ EBITDA CAGRs of ~34%/42% over FY22-24.
• Hence the stock could be bought with a Target Price of Rs. 358 with a timeframe of more than a year.
