Neutral Bajaj Finance; target of Rs 5000: Motilal Oswal

Motilal Oswal's research report on Bajaj Finance

PAT declined 29% YoY to INR11.5b (19% miss) in 3QFY21. The miss was wholly on account of lower-than-expected NII (15% miss). The same was offset by lower credit costs (10% beat). An interest reversal of INR4.5b led to the NII miss. n GNPL ratio (excluding the SC dispensation on term loan EMIs payments) increased to 2.86% from 1.34% QoQ. BAF wrote-off ~INR20b worth of loans (1.4% of loans) and restructured INR20.4b worth of loans (1.4% of loans). The management also lowered its credit cost guidance for FY21 to INR59-60b from INR60-63b earlier and reiterated its run-rate credit costs of 1.6-1.7% for FY22.

Outlook

we maintain our Neutral stance with a TP of INR5,000 per share (5.5x FY23E BVPS).