Accumulate Bajaj Finance; target of Rs 2350: Dolat Capital

Dolat Capital's research report on Bajaj Finance

with an AUM growth of 38% and benefits of operation leverage translating into earnings growth of 66% YoY. The negative was weakening asset quality by 10 driven slippages outpacing recoveries by 10bps QoQ to 1.49% and reduced provisions cover. We remain confident on its ability to continue the growth momentum and increase market share as peers tighten their belts, ability to sustain NIMs and maintain customer acquisition and asset growth. Despite the increased volatility and regulatory hangover, it is well placed to weather the liquidity squeeze and risk aversion. Premium valuations and high beta coupled with sector aversion is likely to induce the volatility nevertheless premium valuations are likely to persist.

Outlook

With a lower tenures assets and matched liability profile, it is well placed amidst the regulatory overhang and current adverse market sentiment. Despite narrowing, the relative premium valuations are likely to persist. At 5.5x FY20E P/ABV,
Accumulate.