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Brazilian Fintech INTR: Growth Amidst Discounts
4 Jul
Summary
- Inter & Co. is a Brazilian fintech platform with 44 million users.
- The company is shifting towards secured lending, now 67% of its loans.
- INTR stock trades at a discount to its future profitability potential.
Inter & Co. (INTR), a prominent Brazilian fintech and digital banking platform, is positioned within an attractive emerging market valuation environment. The company has transformed into a full-scale digital super app, catering to approximately 44 million users by offering a wide array of financial services.
Its revenue is predominantly driven by net interest income, supplemented by fee income. A key strategic pivot involves an increased emphasis on secured lending, which now constitutes 67% of its loan portfolio, enhancing risk profiles and enabling scalable expansion.
Management has set ambitious targets to elevate return on equity to 28% by 2029, driven by enhanced underwriting and operational efficiencies. The firm is also expanding internationally, with over 5 million users for its USD-based services in the United States.
Despite Brazil's economic volatilities, Inter&Co exhibits robust growth, with earnings expected to expand significantly in the coming years. Its current valuation, approximately 6.5x forward earnings, suggests a considerable discount relative to its long-term potential.
