Motilal Oswal has given Buy recommendation for Bajaj Finance recommended buy rating on the stock with a target price of Rs 8310 in its research re with a target price of Rs. 8310 in its research report issued on Oct 21, 2022
Motilal Oswal’s research report on Bajaj Finance
PAT grew 88% YoY to ~INR27.8b (in line) in 2QFY23. This healthy operational performance was driven by robust customer additions, new loan acquisitions, and strong velocity, aided by its omnichannel strategy and the digital ecosystem. NII grew 29% YoY to INR55.4b. Other operating income grew 31% YoY, driven by a healthy improvement in fee income and higher treasury and investment income. NIM (calculated) improved by ~3bp QoQ to ~13.3%. We expect NIM to remain stable in FY23, but compress by ~30bp in FY24 due to BAF’s limited ability to pass on the increase in borrowing costs against a large fixed-rate loan book. We model in an AUM/PAT CAGR of ~27%/40% and expect BAF to deliver a RoA/RoE of 4.6%/24% in FY24. We remain watchful of the various developments in BAF’s payment offerings, improvement in velocity from digital transformation, and foray into the Credit Card business, subject to approval from the RBI.
We reiterate our Buy rating with a TP of INR8,310 (premised on 7.7x FY24E BVPS).