Indiabulls Financial Services once again posted a fantastic set of results this quarter. It reported 68% jump in it’s net profits in Q1 FY12 to 220 crores as against 131 crores a year ago. Income also grew around 75% to 758 crores as against434 crores a year ago. Indiabulls have been consistently posting good set of numbers every quarter but have not got the value in terms of stock price. I expected a decent upmove post last quarter results but on the same day RBI made a statement that banks will no longer do priority lending to NBFCs and thats it, the stock crashed and went on crashing atleast 20% before picking up again. Well honestly it gave a very good buying entry below 150 as now after Q1 results, the stock crashing to those levels is unlikely.

Market had expected a good set of numbers and thus the stock moved up from it’s lows to 170 plus and post results stock has already gained 10% in two days. I am expecting some more rise in short term, however my targets are for longer term duration and I see this stock moving upto 240-250 in medium to long term. Indiabulls Finance currently has  26+ kind of EPS and Im expecting no less than an EPS of about 30 for full year FY12. With an EPS of 30, the stock cannot trade just around 180-190 and is bound to go up with time. The management is very confident of maintaining good growth forward and has guided for a 30% loan book growth as well in FY12. Expect decent set of returns in the next couple of quarters also from Indiabulls Finance. If the market has failed to give value to this stock yet then treat it as a buying opportunity and stay put.

For those who are already invested in this scrip, have patience and continue to hold the stock with targets of 240 – 250 from a longer term view. The company is doing really good and that will reflect on it’s stock price some or the other day. For now, Im valuing indiabulls around 8x FY12 earnings, but Im sure if markets tend to recover, this stock has the potential to hit 10x P/E also, but lets not go that forward. For now we should just hope for a moderate growth in P/E for this company and thus 240 is the targets for now. Depending on how the company performs in coming quarters and how the market is valuing it’s growth, we can upgrade/downgrade targets in future.

Hold Indiabulls Financial Services with a target price of 240.

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