Sharekhan

Target: ₹1,050

CMP: ₹898.00

We believe the company is likely to sustain an ~18% RoE in the near to medium term with growth gradually picking up from here on. Most internal systems and processes have been streamlined thus focus now is on accelerating the growth. Moreover, an additional three crore houses construction under PMAY scheme is potentially positive.

 The company is guiding for loan growth of about 15 per cent in FY25 and 18-20 per cent from FY26 onward. Asset quality trends are expected to remain stable and credit cost to moderate going forward. Earnings growth is expected to improve as growth picks up given that most internal systems and processes have been streamlined thus focus now is on accelerating the growth. Moreover, an additional three crore houses construction under PMAY scheme is potentially positive.

The company has successfully demonstrated its ability to maintain its pristine asset quality in the past cycles. Outlook on asset quality remains stable.

 Stock trades at 2.3x/2.0x its FY2025E/FY2026E ABV estimates. We maintain Buy rating with a revised PT of ₹1,050.