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Last Updated : Oct 23, 2019 11:19 AM IST | Source: Moneycontrol.com

Global brokerages remain bullish on Bajaj Finance post Q2; JP Morgan raises target

The stock in the last one year rallied 93 percent on the back of consistent earnings performance.

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Shares of Bajaj Finance gained 1.6 percent intraday on October 23 as global brokerage houses retained their bullish stance onthe  stock after strong Q2 earnings.

The stock in the last one year rallied 93 percent on the back of consistent earnings performance. It was quoting at Rs 4,077, up Rs 45.05, or 1.12 percent on the BSE at 10:52 hours IST.

The non-banking finance company on October 22 reported a massive 63 percent year-on-year (YoY) rise in July-September quarter profit, beating analyst expectations while net interest income increased 48 percent YoY with new loans growth of 23 percent YoY in Q2.

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Global brokerage house HSBC has maintained its buy call on the stock with a target price at Rs 5,100 per share as Bajaj Finance delivered yet another quarter of strong operating performance.

"The company continues to invest in distribution & expand its geographic footprint. Well-diversified loan book allowed company deliver above-industry growth rates," says the brokerage which expects a 45 percent CAGR in consolidated earnings over FY19-21.

JPMorgan also retained its overweight call on the stock and raised target price to Rs 4,500 from Rs 3,800 per share as company reported another strong show on loan growth, and fee and liability improvement is notable.

Hence, the brokerage upgraded its FY20/21 EPS estimates by 9/10 percent.

Bajaj Finance's asset quality was largely stable in Q2 with gross non-performing assets as a percentage of gross advances at 1.61 percent for the quarter against 1.60 percent in previous quarter while net NPA increased 2bps sequentially to 0.65 percent in Q2.

Total slippages increased to Rs 786 crore at the end of the September quarter against Rs 702 crore in the June quarter, but net slippages dropped to Rs 119 crore compared to Rs 290 crore in the same period.

"While we believe that the long term business strengths remain, and the management indicated for a demand revival for rural & semi-urban India buoyed by strong monsoons, in the near term there may be challenges. However, for the near term the higher credit cost guidance is a concern," said Sharekhan which maintained buy rating on the stock with a revised price target of Rs 4,400.

Emkay remained confident of BAF management's ability to manage growth momentum, supported by deep geographic presence and diversified product offerings. It reiterated buy rating with a revised target of Rs 4,692 based on 6x FY22E P/B.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Oct 23, 2019 11:19 am
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