Broker's call: Bajaj Finance (Buy)

| Updated on March 15, 2019

Anand Rathi

Bajaj Finance (Buy)

CMP: ₹2,859.7

Target: ₹3,370

In its latest quarterly results, Bajaj Finance has reported 54 per cent growth in PAT to ₹1,059 crore led by 41 per cent loan growth and NIM expansion (about 50bps to ~12.1 per cent y-o-y). Asset quality remains under control with GNPAs and NNPAs coming at 1.55 per cent and 0.62 per cent respectively. Loan growth was largely led by consumer finance segment growing 42 per cent y-o-y, 13 per cent q-o-q to ₹43,826 crore.

Per capita GDP of India is expected to reach $ 3,274 in 2023 from $ 2,135 in 2018. Demand for consumer durables in India has been growing on the back of rising incomes; this trend is set to continue even as other factors such as rising rural incomes, increasing urbanisation, a growing middle class and changing lifestyles aid demand growth in the sector.

A well-diversified credit portfolio, focus on cross selling, customer acquisition, systematic expansion in delivery channels both physical and virtual, and distribution of products through these channels are likely to sustain robust growth in AUM going forward. We initiate our coverage on Bajaj Finance with a ‘buy’ rating and target price of ₹3,370 a share.

Published on March 16, 2019

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