Motilal Oswal Financial Services (MOSL) has reaffirmed its ‘Buy’ rating on Five Star Finance with a target price of ₹900 per share, implying an upside potential of approximately 28% from the current market price of ₹701.00.
The brokerage highlights that the company is undergoing a near-term phase of stabilization, which is expected to pave the way for healthy growth in the medium to long term. However, in the immediate future, the company may witness some compression in net interest margins (NIMs), primarily due to a 200 basis points reduction in incremental lending yields since November 2024.
MOSL notes that the full impact of these lower yields will be reflected in the fourth quarter (Q4) financials, affecting NIMs. Despite this, the long-term fundamentals remain strong, with the company positioned for a recovery in margins and growth as the interest rate cycle stabilizes.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult your financial advisor before making any investment decisions.
