Bajaj Finance Ltd. share price target

While NII rose 41% YoY to INR47.3b (6% beat), due to higher interest income from IPO financing and lower negative carry, it was slightly mitigated by higher opex (up 50% YoY and 9% above our estimate). Credit costs stood at INR10.5b (est. INR11.5b), which included an additional management overlay of INR2.5b in 3QFY22. GNPA/NNPA ratio improved by ~72bp/~32bp QoQ to 1.73%/0.78%. OTR book classified under Stage 2 stood at INR14.53b (~80bp of AUM). BAF carried ECL provision of INR3.17b (21.8%) in this book....

HDFC Ltd is the largest housing finance company in India with AUM of | 5.2 lakh crore. With housing demand picking up, we believe HDFC would be the largest beneficiary of the same...

We expect further growth in advances in the coming months, as festive season kicks in. However, it remains to be seen, how the company fares on managing its NPA levels as well as the progress on its transformation initiative. The stock has rallied in recent past, and there's limited upside potential seen from current levels. We therefore maintain our HOLD rating with a revised target price of Rs. 7,898 based on 11x FY23E BVPS. Credit growth revival aids topline During Q2FY22, Bajaj Finance's net interest income rose 28.4% YoY to Rs. 5,334cr, led...

Bajaj Finance Q2FY22, Strong performance with improved loan growth and asset quality, in line with estimates Bajaj Finance has continued to post robust 53% growth in the net profit to Rs 1480.99 for the quarter ended September 2021 (Q2FY2022). Income from operations on a consolidated basis increased 16% to Rs 6687.34 crore, while other income jumped 38% to Rs 1044.72 crore. Total income moved up 19% to Rs 7732.06 crore in the quarter ended September 2021. Interest...

We revise our rating to HOLD from SELL with a revised target price of Rs 7,500.

PAT was up 53% YoY and 48% QoQ to INR14.8b (8% miss) in 2QFY22. While NII at INR42.9b (10% beat) was up 26% YoY due to higher interest income from surplus liquidity and from IPO financing, it was mitigated by higher OPEX (up 48% QoQ and 40% above our estimate). Credit costs stood at INR13b (est. INR11b), which included additional COVID-19 provisions of INR3.5b in 2QFY22 to guard against contingencies from a potential third wave. GNPL ratio/PCR improved by ~50bp/~400bp QoQ to 2.45%/55%. The...

Alternate Stock Idea: Apart from BAF, in our BFSI coverage we also like HDFC Ltd. HDFC Ltd is the largest housing finance company in India with a loan size of ~| 4.98 lakh crore. It has a presence in other financial services segments like life insurance, banking, AMC, etc, via its subsidiaries...

What should investors do? Bajaj Finance's share price has grown by ~7.2x over the past five years (from ~| 1100 levels in September 2016 to ~| 7800 levels in September 2021). Factoring in management agility towards product development...

BAF's return ratios have been consistent and also the highest in our Coverage Universe (excluding gold Financiers). Given the strong recovery post relaxation of the lockdowns and the healthy progress made in its digital transformation program (including wallets and payments), we reiterate our Buy rating, with a TP of INR7,700 per share (8x 1HFY24E BV)....

Impact of the pandemic lingers on, but the rising AUM, declining OpEx and growing deposits provide hope for improvements in asset quality, that in turn should lay the foundation for further growth. At current price levels however, we see limited upside potential and thereby...