Accumulate Bajaj FinServ; tgt of Rs 582: Greshma Research

“Bajaj Finserv posted strong numbers for Q1 FY12 in line with the strong annual results in FY2011, with all its subsidiaries showing strong growth. Bajaj Finance posted a PAT of Rs91 crs for Q1 FY12 as compared to Rs47 crs for Q1 FY11, which is a growth of 94%. The Life Insurance business showed a growth of 169% as it posted profits of Rs278 crs in Q1FY12 as compared to Rs169 crs in Q1FY11. The General Insurance segment also picked up from sluggish performance in the past and posted a profit of Rs39 crs in Q1 FY12 as compared to Rs31 crs in Q1FY11, which is a growth of 26%. The AUM (Assets Under Management) stood at Rs9025 crs for Q1FY12 as compared to Rs7571 crs in Q1FY11, which is growth of 19%. Bajaj Allianz General Insurance Company Limited (BAGIC) posted Gross written premium of Rs798 crs in Q1FY12 as compared to Rs718 crs in Q1FY11, which is a growth of 11%.”

“Bajaj Finserv numbers were slightly higher than our estimates on account of better than expected results of Bajaj Finance. The life Insurance business has taken a hit due to regulatory changes last year and new Business premium was down at Rs378 crs, which was below our estimate of Rs412 crs. However Bajaj General Insurance Business has delivered strong performance with Net earned premium improved by Rs527 crs vs Rs454 crs last year. We are valuating the company on SOTP evaluation of its Life insurance, General Insurance, Bajaj Finance (55.1% stake), Investments (50% discount) and arrive at a price target Rs 582. We are expecting better performance from the life Insurance business going forward. We maintain our Buy recommendation on the company and advice investors to accumulate the stock at current levels,” says Greshma Research report.   

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