Accumulate Bajaj Finance; target of Rs 5491: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Bajaj Finance

BAF’s Q3FY21 business update indicates strong customer augmentation but continued caution on incremental lending. 5% AUM growth over Q2-Q3FY21, slowing incremental loans trend QoQ in Q3FY21 and channel checks suggesting reduction in LTVs with stringent KYC checks indicate Co.’s precedence for credit quality over aggressive book expansion. While channel checks suggest improving consumer financing, BAF’s cognizance on delinquency control until clarity emerging on credit bureau stands credible. Against this backdrop and strong price momentum, we believe BAF is entering into a priced-to-perfection zone.

Outlook

Hence, we downgrade the stock to Accumulate (earlier BUY) valuing BAF at 6.7x PABV Mar’23E implying price target of Rs 5,491. BAF stands poised to deliver 19-20% ROEs/3.8% RoAs by FY23E and hence remains a constructive bet over 3 years’ time frame.

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