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Geojit Financial
Bajaj Finance (Buy)
CMP: ₹2,160.05
Target: ₹2,570
Bajaj Finance Limited (BFL) is one of the leading non-banking financial companies (NBFC) in India. It is engaged in lending across retail, SME, and commercial customers and accepts public and corporate deposits.
Q4FY20 assets under management (AUM) grew 27 per cent y-o-y to ₹147,153 crore. As of April 30, 27 per cent of the consolidated AUM was under moratorium.
Net interest income rose 38.4 per cent y-o-y to ₹4,679 crore in 4QFY20. However, profit after tax (PAT) fell 19.4 per cent y-o-y due to high provisioning (+377.4 per cent y-o-y). Excluding Covid-19 provisioning, adjusted PAT rose 37.9 per cent y-o-y.
Capital adequacy ratio declined to 25.0 per cent versus 26.8 per cent in Q3FY20, and Tier-I ratio also deteriorated to 21.3 per cent versus 23.2 per cent in Q3FY20.
Recording strong topline performance in this quarter we believe that the heavy provisioning will give enough buffer in this challenging environment amidst Covid-19, eventually allowing the company to bounce back.
We upgrade our rating to ‘buy’ with revised target price of ₹2,570 based on 3.5x FY22E BVPS.
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