Bajaj Finance Ltd. share price target

reversals to the tune of Rs4.5bn and slower fee income traction (mere3% QoQ growth) due to caution on disbursements drove down PPoP with a decline of 3% QoQ and YoY. PAT at Rs11.5bn stood broadly in-line (PLe: Rs11.8bn) growing 19%QoQ led by lower provision (down 21%QoQ) as credit costs on standard assets stood down (190 bps in Q3 v/s 369 bps in Q2) with collection efficiencies reverting to pre-COVID levels in early buckets. Yet, BAF reported...

GNPL ratio (excluding the SC dispensation on term loan EMIs payments) increased to 2.86% from 1.34% QoQ. BAF wrote-off ~INR20b worth of loans (1.4% of loans) and restructured INR20.4b worth of loans (1.4% of loans). The management also lowered its credit cost guidance for FY21...

Opening up of businesses, collections closer to pre-Covid levels and adequate provisioning buffers for any untoward stress indicate positive undercurrents for NBFCs. Closer to higher single digit AUM growth, NIM improvement underpinned by reduced B/S liquidity and peaked out credit costs sum up Q3FY21 earnings expectations. Gold and housing financiers should continue to outshine other asset classes both in terms of growth and asset quality. Yet, H2FY21 should provide better clarity on asset quality picture across all NBFCs as 90dpd and credit bureau score freeze lift. While...

delinquency control until clarity emerging on credit bureau stands credible. Against this backdrop and strong price momentum, we believe BAF is entering into a priced-to-perfection zone. Hence, we downgrade the stock to Accumulate (earlier BUY) valuing BAF at 6.7x PABV Mar'23E implying price target of Rs 5,491. BAF stands poised to deliver 19-20% ROEs/3.8% RoAs by...

We downgrade our rating to Sell from Hold with a revised target price of Rs 4,140 (4.8x FY23E ABV).

Bajaj Finance has sailed through the headwinds and emerged stronger with a leaner operating model and robust growth guidance. RBI's new banking licence review has recommended that large NBFCs with >| 50000 crore assets with 10 year existence can apply for banking licence. Also, the management commentary to consider the same if it is favourable bodes well for the long term view of the stock. Growth guidance of ~25% for FY22E and opportunity to apply for banking licence have resulted in renewed interest of investors in the stock....

Q2FY21 AUM grew 1.1% YoY to Rs. 137,090cr. As of 30th Sep, the AUM under moratorium improved to 8.0% (15.7% in Q1FY21). Net Interest Income rose 4.0% YoY to Rs. 4,158cr. However, PAT slipped 35.9% YoY, as provisions rose to Rs. 1,700cr from Rs. 594cr in Q2FY20....

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