Bajaj Finserv Ltd. share price target

Consolidated revenues for Q3FY25 stood at INR 320,418 Mn, up 10.3% YoY but down 4.9% QoQ, missing our estimates due to slower growth in insurance income. The company reported a consolidated profit of INR 22,310 Mn, marking a 3.4% YoY increase (+6.9% QoQ). The cost-to-income ratio improved to 69.6% from 71.6% in Q2FY25. Earnings missed our estimates by 3.4%, primarily due to lower-than-expected operating profits.

Bajaj Finserv unveiled its new long-range strategy for FY25-29 and identified new megatrends across business lines. Newer businesses are currently at a nascent stage but provides a huge opportunity in medium to long term. These are likely to breakeven in the next 3-5 years.

The consolidated revenues stood at INR 337,037 Mn, an increase of 29.5% YoY (+7.1% QoQ) for Q2FY25. Revenues exceeded our estimates, led by higher growth in lending income.

BJFIN reported a satisfactory performance in Q2FY25 with reasonable performances posted by its established operating subsidiaries (BAF, BAGIC, and BALIC) amid the difficult and changing external environment.

After media reports indicated that Allianz Group might be looking to exit its 23-year old India Insurance JVs (BALIC and BAGIC) with the Bajaj Group, BJFIN in its exchange filing confirmed that Allianz has communicated to the company its intent of exiting the Indian Insurance Joint Ventures.

We maintain a Buy rating on Bajaj Finserv, with a revised SOTP-based PT of Rs. 2,350 factoring the upside in valuations of its key subsidiaries.

We initiate coverage on Bajaj Finserv (BJFIN) with a BUY recommendation and Sep-25E TP of Rs2,150/share (~16% upside), implying FY26E consolidated P/B of 4.1x.

The consolidated revenues stood at INR 314,799 Mn, an increase of 35.2% YoY (-1.8% QoQ) for Q1FY25. Revenues were above our estimates, led by higher growth in premiums and other operating income.

The consolidated profit after tax for FY24 were INR 81,478 Mn, a growth of 27.0% YoY. Excluding the volatile mark-to-market unrealized gains of BAGIC and BALIC, the consolidated profit after tax was INR 81,800 Mn, up 21.0% YoY.

As of December 31, 2023, AUM reported a 34.7% YoY/ 7.1% QoQ growth at INR 31,09,680 Mn, led by the strong growth in new customer addition during the quarter. The customer franchise stood at 80.4 Mn as of December 31, 2023, compared to 66.1 Mn as of December 31, 2022, a growth of 21.7%.

As of September 30, 2023, AUM reported a 32.9% YoY/ 7.5% QoQ growth at INR 29,02,640 Mn, led by a healthy increase in customer franchise on account of improving penetration in new geographies. The Company has added an AUM of INR 428.85 Bn in H1FY24.

As of June 30, 2023, AUM reported a 32.4% YoY/ 9.2% QoQ growth at INR 24,73,790 Mn. The company registered its highest-ever quarterly AUM growth of INR 227.18 Bn in Q1FY24. In Q1, the company added the highest-ever new customer of 3.84 Mn to the franchise. Thus, as of June 30, 2023, the customer franchise stood at 72.98 Mn, up from 60.30 Mn as of June 30, 2022.