01-01-1970 12:00 AM | Source: ICICI Direct
Buy 5paisa Capital Ltd For Target Rs. 600 - ICICI Direct
News By Tags | #872 #3961 #1302 #6857

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Capital raising to aid business growth ahead…

About the stock: 5 Paisa is a leading discount stock broker backed by the Nirmal Jain led IIFL group.

* Aggressive client accretion with ~84% of incremental client from Tier II & below cities and ~78% of customers below 35 years of age

* The company has cash market share of 4.43% as of June 2021

 

Q1FY22 Results: 5 Paisa reported healthy Q1FY22 results.

* ADTO was up 9% QoQ amid robust client accretion at 2.78 lakh

* Revenue was up 21% QoQ to | 60 crore, led by rise in ADTO and MTF book

* Consequent PAT was at | 7.2 crore (up 23% QoQ)

 

What should investors do?

5 Paisa share price has grown by ~2.3x over the past four years (from ~| 220 in November 2017 to ~| 525 levels in July 2021).

* Being a new age fintech broker, we retain our BUY rating on the stock.

 

Target Price and Valuation: We value 5 Paisa at ~29x P/E on FY23E EPS to arrive at revised TP of |600 per share.

 

Key triggers for future price performance:

* Focus on aggressive client accretion to aid ADTO and thereby topline

* Revamp existing product suite and new product launch

* Improvement in technology & branding to support incremental accretion

* Operating leverage with revenue growth outpacing cost of acquisition

* Operating leverage & tight cost control seen aiding profitability

* MTF surge, clients surge to aid earnings growth and return ratios

 

Alternate Stock Idea: Apart from 5 Paisa, in our coverage we also like MCX.

* MCX is a leader in commodity derivative exchanges in India with over 96% market share in commodities future space as on FY21

* BUY with target price of | 2,000

 

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