Bajaj Finance Ltd. share price target

operating leverage. While current asset quality masks true picture on delinquencies, asset quality management stands impressive with (a) morat AUMs at 18% (including flexi loans morat) (b) elevated COVID provisioning of Rs24bn covering 11% of moratorium book (c) collection ramp-up (added 2500 staff to 4500 existing collection staff), collections up 8-10% in each Jun- Jul (d)improving bounce rates by 3-4% every month from past 3 months (c)...

Rating Action: Moody's downgrades India. Automobiles: May'20 Auto Sales Tractors robust, other segments weak

Q4FY20 AUM grew 27% YoY to Rs. 147,153cr. As of April 30th, 27% of the consolidated AUM was under mortarium. Net interest income rose 38.4% YoY to Rs. 4,679cr in 4QFY20. However, PAT fell 19.4% YoY due to high provisioning (+377.4% YoY). Excluding COVID-19 provisioning, adjusted PAT rose 37.9% YoY. Capital adequacy ratio declined to 25.0% vs. 26.8% in Q3FY20, and TierI ratio also deteriorated to 21.3% vs. 23.2% in Q3FY20. Recording strong topline performance in this quarter we believe that the heavy provisioning will give enough buffer in this challenging...

We recommend a SELL on BAJAJ FINANCE with a Target Price of Rs 1,636, a downside of 9% from CMP of Rs.1,798 and Stop Loss Rs 1,888

BFL is diversified financial services company focused on Consumer, Rural, SME, Commercial, Mortgages and Payments .It is present in 1,035 urban locations and 1,357 rural locations in India with over 1,14,400+ points of sale .Company has large customer franchise of 42.60 MM with loans cross sell franchise of 24.13 MM. Company has AUM mix of Consumer: Rural: SME: Commercial: Mortgages stood at...

BAF Q4FY20 performance was impacted by higher provisions which led to higher than expected decline in PAT by 19/41% YoY/QoQ to Rs 948cr. NII was in-line with expectations at Rs 3,755cr. AUM growth decelerated to 27%YoY at Rs 147,153cr, as the last 10 days of Mach were non-functional (4500cr impact).

The cascading impact of the lockdown is seen impacting recovery and bounce rates have risen 3x to 4x than normal. In auto finance, 70% book in moratorium and overall basis 27%. Asset quality stress is leading to higher credit cost and dip in earnings. Given anticipation of further increase in credit cost and slower business growth (11% for FY21E), we cut our earnings estimates by ~19% for FY22E and, accordingly, ABV estimate has come down from | 686 to | 640. At 3.1x FY22E ABV, RoE moderating to ~15% and RoA under 3%, the stock looks fairly priced currently. Lower growth &...

(down 41%QoQ/19%YoY) for BAF. The 81-day quarter witnessed 5%QoQ growth in customer franchise, 1.4%QoQ/27%YoY growth in AUM translating into 3%QoQ/38%YoY increase in NII. Steady NII traction and lower opex (declined 5%QoQ) despite collection infra ramp-up aided healthy operating profit (up 8%QoQ/46%YoY). While inherent unsecured short tenure business stands susceptible to pandemic shocks, incremental asset quality deterioration should not exasperate as: (a) 68% of customers under morat...

The Company is well capitalised with CRAR of 25.01% as at 31 March 2020. The Company remains one of the most capitalised amongst large NBFCs in India. The Company's liquidity position remains very strong with overall liquidity surplus of approximately Rs. 15,725 crore as of 31st March 2020 on consolidated basis. The Company's liquidity surplus as of 15 May 2020 was approximately Rs. 20,900 crore. In accordance with the RBI guidelines relating to 'COVID-19 Regulatory Package' dated 27 March 2020, the Company has offered EMI mortarium to its customers based on requests as...