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Buy Bajaj Finance; target of Rs 5900: ICICI Direct

ICICI Direct is bullish on Bajaj Finance has recommended buy rating on the stock with a target price of Rs 5900 in its research report dated January 21, 2021.

January 28, 2021 / 05:00 PM IST
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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.


For all recommendations report, click here


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first published: Jan 28, 2021 05:00 pm

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