Comments
Emkay Global
Bajaj Finance (Buy)
CMP: ₹2,220.1
Target: ₹3,570
Bajaj Finance has offered a conditional moratorium to its existing customers instead of a blanket offering. The company has put two main conditions: 1) loans sanctioned after March 1, 2020, are not eligible; 2) only the customers, who do not have more than two EMIs due (historically) in any of their loans, are eligible.
This is encouraging as Bajaj Finance has clearly avoided regular defaulters (track record of more than two defaults) from availing such moratorium. Also, it has safeguarded their new loans, which anyhow should be availed by customers with sufficient cash flows. Further, interest charges on delayed payments would also safeguard some margin loss.
We highlighted our caution on Bajaj Finance earlier due to its lower ticket size lending and higher dependence on a similar set of customers due to elevated cross sale. However, post the recent correction, we have turned positive on the company, considering favourable risk-to-reward ratio.
Bajaj Finance has a well-balanced liability franchise, with excessive cash on the balance sheet of ₹15,000 crore at consolidated levels, which makes it the least volatile among peers in our NBFC coverage universe.
We maintain ‘Buy’, with a TP of ₹3,570, based on ~4.4x FY22E P/B. We maintain ‘Equal Weight’ in NBFC EAP.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.