Prabhudas Lilladher has given Buy recommendation for Bajaj Finance with a target price of Rs. 8953 in its research report issued on Jan 19, 2022

Prabhudas Lilladher’s research report on Bajaj Finance

BAF’s Q3FY22 earnings (PAT at Rs14.8bn vs PLe: Rs15.4bn) beat our estimates led by robust NII traction offsetting higher provisioning (mngt 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. While the digital transformation journey is being closely watched out for, BAF plans to transition all consumers to the new digital platform from February onwards. Focus on long term money (Co. raised Rs27bn 3-year NCDs during Q3FY22) over excess liquidity maintenance (down to Rs144bn from Rs168bn in Q2FY22) and capital investments in subsidiaries (Rs29bn) ensure healthy business traction ahead (26% AUM CAGR: FY22-FY24).


This coupled with receding credit costs pressures (<200bps) to offset the yields drag on NIMs due to incremental focus on low yielding mortgage book (32% of overall loans now) translating into avg 4.5% RoAs over FY22-24. Incorporating healthy business & AQ improvement into our estimates, our FY22 EPS stands higher by 8% and FY23-24 remain largely unchanged. Being valued as a profitable fintech lender, we maintain our multiple at 9.4x Sep’23E ABV with TP unchanged at Rs 8,953. Maintain BUY.

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At 16:00 hrs Bajaj Finance was quoting at Rs 6,932.75, down Rs 440.30, or 5.97 percent.

It has touched an intraday high of Rs 7,368.00 and an intraday low of Rs 6,821.05.

It was trading with volumes of 85,442 shares, compared to its thirty day average of 65,656 shares, an increase of 30.14 percent.

In the previous trading session, the share closed down 2.11 percent or Rs 158.85 at Rs 7,373.05.

The share touched its 52-week high Rs 8,043.50 and 52-week low Rs 4,361.60 on 19 January, 2022 and 19 April, 2021, respectively.

Currently, it is trading 13.81 percent below its 52-week high and 58.95 percent above its 52-week low.

Market capitalisation stands at Rs 418,456.87 crore.

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