Ambit Capital maintains buy on Magma Fincorp, lowers target price to Rs 59
Buy Magma Fincorp Ltd. at a price target of Rs 59.0 .
For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 662.79 crore, up 4.99% from last quarter sales of Rs 631.27 crore and up 6.17% from last year same quarter sales of Rs 624.29 crore. The company has reported net profit after tax of Rs 26.50 crore in latest quarter.
Poor track record of execution, deteriorating asset quality and lack of pricing power expose Magma to vagaries of market liquidity crunch, said Ambit. Shrinking margin profile with poor levers around growth would continue to keep RoA/ RoE muted. But Magma’s seasoned retail book doesn’t warrant deep discount valuation to 3-year rolling crosscycle average.