The last time Daljeet Kohli and Prashant Jain of HDFC MF got together was in Prism Cement. While Daljeet scooped up a chunk of Prism Cement on 14th May 2014 at Rs. 50 per share, Prashant Jain followed him on 9th June 2014 and got HDFC MF to buy a chunk at Rs. 71.
Today, Prism Cement is at 131 and both ace stock pickers are beaming with joy at the huge gains in their respective portfolios.
Prashant Jain’s latest stock pick is L&T Finance Holdings. Yesterday, his HDFC Top 200 Fund scooped up a big chunk of 98,37,000 shares at Rs. 67.60 each, laying out an investment of Rs. 66.49 crore.
Knowing Prashant Jain’s skill in finding winning stocks, we need to quickly get abreast with L&T Finance Holdings’ potential.
The best way to do this is to read Daljeet Kohli’s latest research report.
In a short but succinct crisp report, Daljeet points out that L&T Finance Holding’s asset quality was affected significantly in past few quarters which have resulted in both lower margins and increase in provisioning expense. However, its Q3FY15 result was ahead of expectation on operating front with higher than expected growth in loan book and Net interest income. The asset quality was stable on consolidated level while it deteriorated in L&T Finance mainly due to seasonality. Daljeet believes that L&T Finance is set for gradual recovery in both business growth and asset quality led by improvement in macros.
As regards valuations, Daljeet points out that at the CMP of Rs 69, L&T Finance is trading at consolidated P/AVB of 1.5x and 1.3x for FY16E and FY17E respectively. He recommends a buy with a target price of Rs 84 (1.5x FY17E ABV) which means an upside of 21%.
Daljeet also emphasizes that the recent correction in stock price gives an opportunity to enter the stock at reasonable valuations of 1.5x FY16E ABV which is much lower than the industry multiple of ~2.0-2.5x for FY17E.
Now, the onus is on you to carefully mull over the data and take an independent and informed decision in the matter.