Indiabulls Financial Services reported a PAT of 236 cr as against 83 cr and revenues of 772 cr as against 368 cr in Q4 FY11. Total revenues and net profits of FY11 stood at 2472 cr and 751 cr respectively. There was a jump of 52% in revenues and 150% in net profit on a YoY basis in FY11. The company has consistently shown reduction in their NPA levels for the last six quarters straight and is expected to continue falling. The company is also going to give a dividend of 5 rupees per share soon.

Stock Valuations

The current FY11 EPS stands at 24 as against 10 in FY10. The stock is currently trading at a P/E 7.5. Assuming a normal growth in FY12 of suppose 15% also can take the EPS to close to 28 and the forward year P/E to 6.8. Assuming a P/E of atleast 10, we can see this stock going to 275 – 300 levels in the next 12 to 18 months. From a short term view, this stock can easily cross 220 levels which relates to around P/E of 9 as per FY11 EPS of 24.

Current valuations of 7.5 P/E is looking safe to invest into this stock from a medium to long term perspective with a hope to clock around 40-50% returns.

Buy Indiabulls Financial Services (cmp: 180) with targets of 275 – 300 in 12 – 18 months.

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