Buy AB Capital; target of Rs 320: Emkay Global Financial

Emkay Global Financial' research report on AB Capital

We met Rakesh Singh (ED and CEO – NBFC) of AB Capital for an update on the company, its NBFC business strategy and outlook, and the recent developments in the sector. KTAs: i) Per guidance, the company is progressing well in terms of AUM growth (20-25%), credit cost (~1.3%), and asset quality (broadly stable). ii) FY26-exit ROA (NBFC) to expand to ~2.4% on better yields-led NIM expansion, with stable opex and credit cost. iii) Given the demand stimuli from policymakers (Income Tax slab increase, GST cut, Repo rate cuts, etc), credit growth at the system level should improve ahead. iv) The noise around increasing asset quality issues in MSME should not affect the company, as the concerns are more in the micro segment (where the company has minimal exposure); also, it has nearly 43% of its unsecured MSME book backed by CGTMSE. Overall, the mgmt has a well-thought-out and credit-cycle-tested business strategy and resources to deliver profitable growth with lower volatility and higher predictability.

Outlook

We retain BUY and an unchanged SoTPbased Jun-26E TP of Rs320 (standalone FY27E P/B of 2x, resulting in Rs205/share; subsidiaries’ value after a 25% holdco discount at Rs115/share).

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AB Capital - 12092025 - emkay