Magma Fincorp - Diversified play, optimum risk-adjusted returns - Koktak

Magma Fincorp is a medium-sized NBFC (loan-book of Rs163 bn in March 2013) focused on small businesses and retail loans in interior India. A diversified player, offering auto finance and business loans, we expect Magma to deliver 1.5% RoA and 16% RoE over the medium term, optimum returns in the light of its superior asset-quality performance.

Valuations are attractive at 1.2X PBR FY2014E; we initiate coverage with a BUY rating and target price of Rs130.

Source : Equity Bulls

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