Stock to buy under ₹100: Anand Rathi sees 18% upside in this NBFC share. Should you buy?

In a market environment where valuations are under scrutiny and investors are scouting for quality stocks at reasonable prices, Anand Rathi Financial Services has thrown the spotlight on a little-known non-banking financial company (NBFC) trading under ₹100. The brokerage sees an 18% upside potential in the stock, citing attractive valuations, strong fundamentals, and an improving macroeconomic backdrop.

Let’s break down the rationale, business fundamentals, and what investors should watch before considering this pick.

The Stock in Focus: Mufin Green Finance

The NBFC identified by Anand Rathi is Mufin Green Finance Ltd, a small-cap company operating in the green mobility and EV financing space. The stock is currently trading around ₹84, and the brokerage has given a target price of ₹99, indicating a potential upside of approximately 18%.

Why Anand Rathi is Bullish

In a recent research note, the brokerage highlighted that Mufin Green Finance stands out due to its focused approach in financing electric vehicles (EVs) and green transport, a theme gaining traction in India's decarbonisation journey.

"The company’s niche EV financing model allows it to cater to an underserved segment in Tier II and Tier III cities, where traditional banks have limited penetration. With regulatory tailwinds and an expanding market base, Mufin Green is poised for sustainable growth," said Vikas Jain, Senior Analyst at Anand Rathi.

Jain added that the stock’s price-to-book ratio of 1.6x is attractive compared to peers in the sector, which typically trade between 2.2x and 3x.

Business Fundamentals: A Closer Look

Mufin Green Finance operates in the micro and small loan segment with a specialization in financing electric rickshaws, loaders, and two-wheelers. The company partners with OEMs and e-commerce platforms to extend loans with minimal default rates due to the essential nature of these vehicles for income generation.

Key financial metrics (FY24):

• Net Interest Margin (NIM): 10.8%

• Asset Under Management (AUM): ₹785 crore (YoY growth of 47%)

• Gross NPA: 1.4%

• Return on Assets (RoA): 2.6%

• Capital Adequacy Ratio (CAR): 23.5%

The company’s low-cost structure, tech-enabled disbursal systems, and partnerships with ESG-focused funding agencies make it a standout in the small NBFC space.

Market Context: Favorable Tailwinds

India’s NBFC sector has staged a robust recovery post-COVID, and the green financing segment is now emerging as a key growth frontier. With government incentives for EV adoption, especially in logistics and last-mile delivery, companies like Mufin Green are well-positioned to benefit.

Additionally, interest rate stability, improving rural credit demand, and investor appetite for ESG-compliant businesses have bolstered the sector’s outlook.

"We believe niche NBFCs focused on green energy and financial inclusion will outperform the broader market due to targeted growth and policy support. Mufin Green ticks many of those boxes," said Meenal Shah, independent financial consultant and equity strategist.

Risks to Consider

While the growth prospects are encouraging, investors should be mindful of certain risks:

• Concentration Risk: A majority of Mufin’s portfolio is skewed towards EV financing, which while promising, is still a nascent market.

• Liquidity Constraints: Being a small-cap NBFC, the company may face challenges in raising low-cost capital during volatile periods.

• Credit Risk: Although NPAs are under control, the borrower segment remains vulnerable to economic shocks.

Technical Outlook: What the Charts Say

From a technical standpoint, Mufin Green Finance has seen strong support at ₹78–₹80 levels, with volumes indicating accumulation. The stock recently crossed its 50-day moving average, signaling a potential breakout. RSI (Relative Strength Index) remains below 70, indicating the stock is not in an overbought zone.

Short-term traders may view ₹90 as a resistance level, while long-term investors could eye ₹99–₹105 as the next targets, aligning with brokerage estimates.

Investor Outlook: Should You Buy?

For retail investors seeking affordable small-cap exposure under ₹100, Mufin Green Finance offers an interesting proposition. Its focus on green mobility, low default risk, and digital-first operations gives it an edge in a fast-evolving financing landscape.

However, due diligence is essential. Small-cap NBFCs tend to be more volatile and less liquid. Investors with moderate risk appetite and a 12–18 month horizon may consider entering on dips, ideally near the ₹80–₹82 support zone.

Mufin Green Finance embodies a rare blend of ESG-focused lending, tech-enabled operations, and growth potential, all packaged under ₹100. With an 18% upside projected by Anand Rathi and robust fundamentals, it certainly deserves a spot on the radar of value-conscious investors. That said, a staggered investment approach and close monitoring of quarterly performance would be prudent.