Buy IIFL Finance, target price Rs 604: Hem Securities

Hem Securities has buy call on IIFL Finance with a target price of Rs 604. The current market price of IIFL Finance is Rs 498.

IIFL Finance, incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 18814.20 Crore) operating in NBFC sector.

IIFL Finance key Products/Revenue Segments include Interest, Income From Financial Services, Income From Sale Of Share & Securities, Dividend and Fees & Commission Income for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 2051.44 Crore, up 3.86 % from last quarter Total Income of Rs 1975.18 Crore and up 19.73 % from last year same quarter Total Income of Rs 1713.36 Crore. Company has reported net profit after tax of Rs 397.07 Crore in latest quarter.

The company’s top management includes Mr.Arun Kumar Purwar, Mr.Nirmal Jain, Mr.R Venkataraman, Mr.Chandran Ratnaswami, Ms.Geeta Mathur, Mr.Nilesh Vikamsey, Mr.Vijay Kumar Chopra, Mr.Ramakrishnan Subramanian, Mr.Vibhore Sharma. Company has V Sankar Aiyar & Co. as its auditors. As on 30-06-2022, the company has a total of 38 Crore shares outstanding.

Investment Rationale
The system credit growth is going very robust and the overall demand for credit looks strong even in the rising rate scenario. IIFL Finance is a diversified NBFC. Branch expansion benefits shall now start to accrue and the company’s medium term Opex to Assets ratios will tread lower in the medium term. The company shall also benefit owing to diversification. The brokerage initiates coverage with a “BUY” rating on the stock and value the stock at 2.2x FY24 estimated Book Value to arrive at the Target of Rs 604.

Promoter/FII Holdings
Promoters held 24.9 per cent stake in the company as of 30-Jun-2022, while FIIs owned 23.05 per cent, DIIs 2.71 per cent.