Buy Bajaj Finance; target of Rs 8500: ICICI Securities

ICICI Securities's research report on Bajaj Finance

Bajaj Finance’s (Bajaj) Q4FY24 financial performance was mixed as AUM growth, new customer acquisition, asset quality and operating efficiencies continued to trend as envisaged; continued stress in rural B2C and 21bps QoQ NIM contraction were dampeners. While management maintained its AUM growth guidance at 26-28% in FY25E, likely NIM compression in H1FY25E and revised credit cost to 1.85% vs. 1.7% pre-covid is likely to keep earnings under pressure during H1FY25E.However, management sounded confident about sustaining RoA/RoE at ~4.7%/~20% in FY25E. Bajaj’s resilient business model, built on strong customer acquisition engines and cross-sell, augurs well for the business to maintain leadership in the NBFC space.

Outlook

We retain BUY; TP unchanged at INR 8,500, valuing the standalone business at 5x FY26E BVPS and INR 830 towards housing subs.