Bajaj Finance Ltd. share price target

BAF's 4QFY22 earnings were in line, with a reported PAT of INR24.2b, led by healthy core AUM growth of 26% YoY and a pristine asset quality (GS3/NS3 stood at 1.6%/0.7% and credit cost moderated by ~150bp, despite having to provide INR1b on a large commercial account). Key things to watch out for in FY23 include: a) evolution of its Payments landscape and traction therein, b) velocity on the already launched app and the envisaged new web platform, c) potential foray into the Credit Cards business from its own Balance Sheet, d) TwoWheeler marketplace and diversification to other non-captive OEMs,...

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...

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....

We retain our rating at Hold with a revised target price of Rs 8190(~7.5x FY24E ABV).

Stage 2+3 at 4.6% vs 6.0% (Q2FY22); auto, HLs in yellow but CE improves overlay up from Rs8.3bn to Rs10.8bn QoQ). Strong business momentum (loans grew 26% YoY/9% QoQ to Rs1813bn), continued benign funding costs CoF reduced to 6.72% in Q3FY22 vs 6.77% in Q2FY22) and stark improvement in asset quality (Stage 2+3 down to 4.6% from 6.0% in Q2FY22; nil impact of change in NPA recognition norms) drove the bottom-line....

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...

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...

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...