CLSA has initiated coverage on Muthoot Finance and Manappuram Finance Limited with an ‘outperform’ rating and a target price of Rs 1,900 and Rs 240 respectively.
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The firm sees massive potential upside from current levels for both these stocks.
Both the companies historically have generated RoE and RoA much higher than that of banks and non-banking financial companies (NBFCs).
CLSA believes given the high profitability with low balance sheet risks, both these companies deserve a higher price to book multiple.
According to the brokerage house, both the companies have the potential of at least 10-12 percent compounded annual growth rate (CAGR) over the next five years regardless of gold prices.
Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.
To watch other videos in this series, click on the Standout Brokerage Report tab below.