IIFL Finance share price up 4% in last three months; Motilal Oswal says buy. Here are 5 important reasons why

livemint.com:

Motilal Oswal Financial Services is positive about the stock for the long term as it sees several growth levers at play for the company. The brokerage firm has initiated coverage on IIFL Finance stock with a buy recommendation and target price of ₹800, implying a 26 per cent upside potential.

“IIFL has morphed into a franchise, which enjoys distribution strength, strong presence in co-lending, and superior digital loan origination and underwriting capabilities, and can effectively leverage fintech partnerships to deliver a nearly 25 per cent AUM CAGR over FY23-FY26E," said Motilal Oswal. “The company trades at 1.5 times FY26E P/BV (price-to-book-value ratio) and can sustainably deliver a RoE (return on equity) of more than 20 per cent in the medium term.

We believe IIFL can see further re-rating as investors get more confidence in its sustained execution prowess through strengths that it has built-in its core retail businesses," said the brokerage firm. Here are five important reasons, according to Motilal Oswal, that make it positive about the stock: Motilal Oswal pointed out that over the last two to three years, IIFL has expanded its branch network across gold, MFI (microfinance institutions), and home loans to nearly 4,600 branches versus nearly 2,600 as of March 2021.

"The improvement in productivity across nearly 37 per cent of its branches (each with less than two-year vintage) and the expansion of partnerships for loan originations, are poised as key growth drivers," Motilal Oswal said. "To optimize capital utilisation, IIFL has strategically intensified its attention on assignments and co-lending, which will also contribute to higher profitability.