Bajaj Finance Ltd. share price target

We maintain Hold with target price of Rs 3297 (4.6x FY22E ABV).

Bajaj Finance (BAF) in its business update for the quarter ended September 2020 reported muted AUM growth of 1.3% YoY and almost flattish QoQ growth at Rs 1,37,300cr. Management loan growth guidance is 5% for FY21. New loans booked stood at 36lac vs 65 lac YoY but better than 5.3lac in Q1FY21.

IIP improves further

Q1FY21 AUM grew 7.1% YoY to Rs. 138,055cr. As of June 30 th, 15.7% of the consolidated AUM was under moratorium. Net Interest Income rose 12.4% YoY to Rs. 4,151cr in 1QFY21. However PAT fell 19.5% YoY due to continued high provisioning (+206.1% YoY). As of 30th June i) Capital adequacy ratio stood at 26.4%; ii) Tier I capital at 22.6%; iii) Gross NPA at 1.4%; iv) Net NPA at 0.5% and v) PCR at 65%. Outlook remains positive for the stock with continuous reduction in provision coupled with company's focus on capital preservation,...

Depreciation moved up 34% to Rs 84.22 crore, while loan loss provisions zoomed 206% to Rs 1685.73 crore in Q1FY2021. PBT dipped 29% to Rs 1309.69 crore. Effective tax rate declined to 26.5% in Q1FY2021 from 35.4% in Q1FY2020. Net Profit of the company fell 19% to Rs 962.32...

Bajaj Finance (BAF) reported PAT of Rs 962cr down 19.5% YoY and up 1.5% QoQ, better than expectations on higher other income and improved C-I. However AUM growth was muted at 7% YoY impacted by lockdown and elevated provisions at Rs 1686cr. Asset quality improved with GNPA down 21 bps QoQ to 1.4%