Accumulate Bajaj Finance; target of Rs 2346: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Bajaj Finance

AUM at INR 840 bn is up 40% yoy, led by 44% growth in consumer segment, 22% growth in SME, 48% growth in commercial and ~100% growth in the rural business. PAT at INR 7.2 bn was above our expectations and grew 60.5% yoy. NII at INR 23.7 bn was up 403% yoy, on back of robust credit growth coupled with healthy spreads. Opex at INR 9.9 bn was slightly elevated, marginally above the management’s guidance, on account of continued investments in technology and geographical branch expansion. Asset quality improved during the quarter with GNPA (30 dpd) at 1.48%, down 19 bps qoq and NNPAs at 0.38%, down 15 bps qoq. Despite the improvement, the company has gone in for increased stress coverage with PCR at 74.3%. Provisioning during the quarter was INR 2.7 bn translating into credit costs of 1.3% for the quarter, +4 bps qoq. Despite some of the deteriorating macros, the company has guided for a relatively safer asset quality going ahead. The company would also continue to invest in technology and geographical expansion going ahead which could keep opex ratios slightly elevated. Bajaj Housing Finance, a 100% sub of Bajaj Finance, reported an AUM of 35.9 bn. The management expects the housing finance sub to contribute significantly going ahead.

Outlook

We value the company at INR 2,346 per share based on P/B of 5.5x FY20E BVPS of INR 427. We recommend ACCUMULATE.

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