Bajaj Finance Ltd. share price target

Bajaj Finance (BFL) is one of the leading asset finance NBFCs. The USP of BFL is its stronghold in the consumer durable (CD) & lifestyle product financing business (~15% of the AUM). Further, it has a diversified loan portfolio with five heads viz. consumer finance (39% of loans), SME (33%) commercial (12.9%), rural (7.2%) and mortgage (7.8%). Such diversity has given BFL an edge in terms of AUM growth (>40% CAGR to | 60194 crore in FY11-17) and asset quality with steady 1.2-1.6% GNPA in the past three years). PAT rose 40% CAGR in FY11-18 to | 2646 crore (old GAAP)....

Bajaj Finance (BAF) reported 1QFY19 net profit of INR 8.35bn as per IndAS, up 81% YoY. As per IGAAP, net profit was up 69% YoY at INR 10.18bn. AUM growth remained strong at 35% YoY (39% YoY excluding short term IPO financing), driven by consumer, rural and commercial segments. Customer acquisition remained healthy, with the company acquiring 2.1 million new customers (up 33% YoY) in 1QFY19. Margins increased 70bps YoY to 11.6% on a 40bps YoY decline in funding costs. Asset quality trends improved, with the gross NPL ratio improving to 1.39% YoY with coverage ratio at 69%.Credit costs were down at 153bps YoY. BAF remains well-positioned to deliver sustainable profitable growth going...

Operating expenses increased 40% to Rs 962.75 crore, allowing the operating profit to jump 41% to Rs 1402.35 crore. Depreciation moved up 48% to Rs 29.25 crore, while loan loss provisions declined 4% to Rs 273.90 crore in Q4FY2018. PBT increased 59% to Rs 1099.20...

AUM witnessed growth of 34% YoY to | 80444 crore, which was in line. It was led by the consumer finance & commercial segments NII increase was higher than estimate at 41% YoY to | 2083 crore led by AUM growth and strong calculated margins of ~10% vs. estimate of ~9%. Operating profit increased 40% YoY to | 1373 crore Headline asset quality stayed steady QoQ with GNPA ratio at 1.48% and NNPA ratio at 0.28%. The provision coverage ratio improved to 75% vs. 68% in the previous quarter...

Recently, the stock price of Bajaj Finance Ltd. (Bajaj Finance) corrected by ~17% from 52-week high of Rs.1,986 despite reporting good set of numbers in the recent quarters. Bajaj Finance has a diversified loan portfolio and a leadership position in under penetrated and growing segments like consumer durables (CD) financing, lifestyle product financing, two-wheeler financing, LAP, etc., which account for its ~50% of its portfolio. Despite a weak economic environment in the past few years, these segments have helped Bajaj...

Bajaj Finance's (BAF) Q3FY18 PAT at Rs 7.7 bn (+38% YoY) was in line with our estimate, driven by strong 35% YoY growth in AUM. BAF's 100% subsidiary, Bajaj Housing Finance (BHF), became fully operational and has AUM of Rs 15.9 bn.

NII increased strongly by 38% YoY to | 2109 crore led by AUM growth & strong calculated margins of ~11%. Operating profit increased 38% YoY to | 1420 crore GNPA ratio was steady QoQ at 1.67%. The PCR was at 68%...

BFL continues to maintain one of the best asset quality among the peer group. Despite migration to 90-dpd (days past due) non-performing assets (NPA) recognition, asset quality remained largely stable sequentially. Gross/Net NPA ratios increased by 2/2 bps QoQ to 1.7%/0.5%. Provision coverage ratio (PCR) also improved by 100 bps to 70.0%. Going forward, we expect asset quality to remain stable and project Gross/Net NPA to stand at 1.8%/0.4% by FY19E. Recent capital infusion to support robust growth momentum BFL raised Rs4,500cr of equity capital through QIP route in Q2FY18 which helped it to boost capital adequacy ratio (CAR) by 527 bps QoQ to 25.4% with Tier I ratio of 19.9% (566 bps QoQ)....

Bajaj Finance's (BAF) Q2FY18 PAT at Rs 5.6 bn (+37% YoY) was marginally below street and our estimates. AUM growth was strong at 38% YoY driven by consumer and commercial lending segments while rural business also continued its strong momentum albeit on a small base.