This Adar Poonawalla-backed NBFC becomes D-Street’s ‘darling’; can the tag last long?

If one looks at the sectors that have given positive returns in 2022 so far, non-bank finance companies will find themselves in the list. But the one stock in this pack that has turned out to be the “darling” of Dalal Street is Ltd.

Investor interest in the stock gained traction after billionaire Adar Poonawalla acquired the company, earlier known as , in May 2021.

One could say that the stock has performed a somersault since the deal, as it made to the multibaggers’ list, sustained gains in 2022 as well, and has been outperforming benchmark indices.

From around Rs 45 in January last year, the stock has moved past Rs 300, and market experts see more legs to this rally.

The number of mutual funds holding the stock in their portfolio has doubled since May, data on Trendlyne showed. Aditya Birla Sun Life Small Cap Fund was the highest buyer of the shares of the NBFC in October.


So, what’s driving the interest in this counter?
Besides the takeover, the other factor that has attracted investors is the earnings performance. The company has delivered strong earnings growth consistently, driving brokerages’ bullish view.

The NBFC aims to grow its assets under management 3 times from the current levels by FY25, and be among the top 3 NBFCs for both consumers and medium and small and medium enterprises.

Analysts believe that the company is on track to achieve this target.

“Sharp business execution, improved market positioning in focused product segments, business scale-up through diversified and granular portfolio mix, and consistent earnings delivery are likely to trigger rerating for the stock,” said in a recent note.

The new promoters, their vision and strategic growth is likely to unlock value for the company, according to analyst Ajit Kumar Kabi.

The stock remains a “strong buy” for analysts despite higher valuations.

For Vikas Kumar Sethi of Sethi Finmart, Poonawalla Fincorp is among his top picks in the midcap space.

“Fundamentally a great company, a strong company..I would advise investors to buy into this stock at the current levels with the target of Rs 450 in about a year’s time,” Sethi told ET Now in an interview.



(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)