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.
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.
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