ICICI Direct's research report on Bajaj Finance
Led by standstill status from supreme court, GNPA ratio declined to 0.55% from 1.03% QoQ and NNPA ratio came at 0.19% from 0.37% on consolidated basis. However, proforma GNPA and NNPA surged to 2.86% and 1.22% respectively. Restructuring is at 1.4% of loans and has provisions of Rs397 crore on it. The Company expects to revert to pre-Covid NNPA by 1HFY22, except auto finance business which may take longer due to underlying collateral value. During the quarter, the Company has also done one-time principal write-off of ₹1,970 crore, on account of Covid related stress. The Company holds management overlay provision of ₹800 crore as of 31 December 2020 for Covid related stress. Consolidated AUM witnessed QoQ growth of 4% YoY to Rs 143550 crore, declining 1% YoY. The Company expects core AUM growth to resume to pre-Covid levels by Q4FY21. Consumer B2B declined 16% YoY but improved 10% QoQ to Rs 22893 crore.
Outlook
We maintain valuation at multiple at 7x FY23E ABV and target price at Rs 5900. Maintain BUY recommendation on the stock.
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