Karvy Broker Research reports

Stong Insurance Performance; Lending Arm Equipped toWithstand COVID-19 Shock: In Q4FY20, Bajaj FinServ reported consol PAT of Rs. 1.9 Bn, down 77% YoY owing to the following COVID19 related impacts, a) MTM losses on BAGIC & BALIC investments of Rs. 7.7 Bn and b) contingency provision of Rs. 9.0 Bn made by lending arm, Bajaj Finance (BAF).

Trump administration in the US issued a presidential proclamation to block entry of foreign workers for the next 6 months ending December 2020. This order came into effect from June 24 2020.

Outlook and Valuation: We value INFOE at Rs. 2092 based on SOTP. While the standalone business is valued at a 3-yr historical average FY22E PE of 64x, Policybazaar and Zomato are valued based on their last round of funding.

Valuation and Risks:A cash rich and clean balance sheet, management with excellent track record and high brand recognition will help sustain valuations.

Valuation and Risks: We reduce our Revenues for FY21E / FY22E by 1.6% / 2.5% due to downgrade across revenue segments with the exception of US and EU.

Strong Revenue Growth in Domestic Formulations and APIs: In Q4FY20, total revenues of IPCA Labs increased by 20.5% YoY to Rs. 10.05 bn mainly due to strong performance in domestic formulations and API business.

Valuation and Risks: We have valued the stock based at 7.55x 1-yr forward P/BV mean at 0.8 x discount and has arrived at a price target of Rs. 1155 with potential downside of 13% and we rate it SELL'.

Expensive Valuation:Despite the correction post the pandemic, the stock has retraced to nearly 10% from the peak seen around March 2020.

Effect of Withdrawal of Long Term Policy Cover for Motor Insurance: Long-awaited industry relief is finally been delivered by IRDAI on June 8, 2020, with the withdrawal of long term insurance schemes

Valuation and Outlook: We have valued the stock based on 2.7x forward P/EV on discount of 0.8x and 44.4x forward P/VNB with at a discount of 0.9x and has arrived at a price target of Rs.418 with potential upside of 5%.