Dolat Capital recommended Accumulate rating on Bajaj Finance with a target price of Rs 3700 in its research report dated May 17, 2019.
Dolat Capital's research report on Bajaj Finance
With a PAT growth of 57% YoY, Bajaj Finance witnessed another highly commendable quarter. The AUM grew 41% YoY, with secular and granular growth in key businesses. It appears to have gained market share in autos, but remained steady in other segments. This is partly due to it being a dominant player in most other segments. While there is a risk of slowing consumption (and lower economic growth), we believe that 1) its market position; 2) inability of competitors to replicate its scale and model; 3) consolidation among smaller players, given the funding constraints; and 4) growth from expansion of customer breadth and width; is expected to help it maintain growth momentum in the short to medium term (factored
CAGR 40% growth in AUM).
We have increased our FY20/FY21 PAT by 5%/10% largely due to lower credit costs and improved efficiency. It is well placed to gain market share with a buoyant quality, amidst the restrained growth in the system. We maintain accumulate, implying 6.5x FY21E P/ABV.
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