Direct Finance Stock Soars 20% Amidst Challenging Auto Lending Market
Translated & summarized from TheMarker by baba
Direct Finance's stock has surged 20% this year, but its auto lending business faces challenges from high interest rates and competition. The CEO expects a return to double-digit returns in auto lending and sees the Sigma City acquisition as a step into business credit.
The story in 5 lines · by baba
- Direct Finance stock is up 20% year-to-date, reaching 1.9 billion shekels.
- The company's core auto lending faces high interest rates and competition.
- CEO Eran Golan anticipates a return to double-digit auto lending returns.
- Mortgage lending margins are expected to continue shrinking.
- Acquisition of Sigma City signals expansion into business credit.
The stock of Direct Finance, a subsidiary of Direct Insurance, has seen a significant rise of approximately 20% since the beginning of the year, reaching a market value of 1.9 billion shekels and making it the top-performing stock in its sector. Despite this success, the company's core auto lending operations are grappling with high interest rates, credit losses, and increasing competition. As of the end of June 2026, Direct Finance holds a credit portfolio of about 7.485 billion shekels, secured by liens on vehicles, and manages 8.524 billion shekels in auto loans for other entities, establishing itself as a prominent player in the field. However, its current market value remains about 15% below its peak of 2.5 billion shekels recorded in 2022.
CEO Eran Golan expressed optimism about a return to double-digit returns in the auto sector. He also anticipates continued erosion of margins in the mortgage market. Furthermore, Golan indicated that the acquisition of Sigma City marks the company's next strategic move into business credit.