6 Stocks To Buy From The Financial Space For Market Beating Returns

Indian markets ended the week slightly better than the last week, thanks to Stupendous gains seen on Tuesday. Volatility is expected to continue in the markets and investors have to stay focussed and buy into good quality stocks only.

6 stocks from the financial space to buy that can offer good returns

Company name	Call	Current market price	Target price
Bajaj Finance	Buy	7344	8953
Cholamandalam Investment	Buy	736	792
L&T Finance	Buy	78	88
Manappuram	Buy	101.9	122
Muthoot Finance	Buy	1057	1431
Shriram Transport	Buy	1190	1521

Buy the stock of Cholamandalam for a price target of Rs 792

According to Prabhudas Lilladher the company is expected to post strong QoQ AUM growth of 5% on the back of strong M&LCV, used vehicles and consumer/SME loans. "Truck utilization levels have improved and fuel prices stabilizing have led to increase in profitability for the operators. New business disbursements saw strong traction in Q1'23 and we expect it to continue in Q2'23. We can see margin improvement sequentially on the back of strong growth in higher yield portfolio. Recommend 'BUY' at target price of Rs 792," the firm has said.

Buy Manappuram Finance for a target price of Rs 122

Manappuram Finance has seen a steep correction and is 56% off its 52-week high price and trades at an attractive valuation of 0.8x/0.7x FY24/FY25 P/ABV. Margins to see improvement as we expect yields to continue with their uptick and rise to 19.7% levels from 19.4% in Q1'23.

"Manappuram's microfinance business should also see improving performance with strong disbursements and asset quality. The benefits of new RBI norms for microfinance companies such as 'removal of pricing cap' should start flowing in. We believe the worst is over for Manappuram Finance and the company is now one amongst our top pick. Recommend BUY at TP of Rs 126 (TP unchanged)," Prabhudas Lilladher has said in its report.

Buy Bajaj Finance, with a price target of Rs 8953

The brokerage has set a price target of Rs 8953 on the stock of Bajaj Finance. "As per the company's business update, assets under management growth in Q2'23 was very strong at 7% QoQ (above our expectation of 6.5%). Customer franchise as of 30thSept-22 was 62.9mn (+19.1% YoY/+4.3% QoQ). New customers for Q2'23 stood at 2.6mn (-0.3% QoQ). Both these parameters have continued to show strength and company has managed to maintain its run rate achieved in Q1'23. Deposit momentum was also extremely strong and showed a 15.5% QoQ growth, at a time when there was intense competition for deposits between Banks and NBFCs. The omni-channel platform will provide a fully-integrated, seamless," the brokerage has said.

 

Vehicle finance stocks to do well

Prabhudas Lilladher expects vehicle financiers like Shriram Transport and CIFC to maintain their momentum (as shown in the last quarter), given strong CV demand. "Bajaj Finance is expected to report a robust 7% QoQ AUM growth along with pristine asset quality, as their omni channel strategy is paying rich dividends towards customer acquisition. We draw comfort in players with strong parentage, market leadership, healthy capital and provision buffers. We rate Bajaj Finance (BAF), Cholamandalam Investment & Finance Corporation(CIF) and Manappuram Finance Ltd (MGFL) as our top picks in the NBFC space," the brokerage has said.