Buy Bajaj Finance; target of Rs 1150: Mirae Asset Sharekhan

Mirae Asset Sharekhan's research report on Bajaj Finance

We expect a 25% AUM CAGR from FY25-FY27, as Bajaj Finance is a leader in consumer financing. The company is poised to capitalise on key catalysts, including lower GST on consumer durables and autos, successful cross-selling, client acquisition, and increased consumer disposable income. NIMs are expected to hold steady at 9.9% (% of average AUM) in FY27 due to reduced borrowing costs. Decline in Opex/AUM from 3.66% in FY25 to 3.44% in FY27 due to better operation efficiencies will help mitigate the impact of lower yields. Gross/Net NPAs would slightly increase. The company is proactively mitigating risk by reducing exposure to high-stress segments and riskier clients, hence credit costs are expected to fall in FY27.

Outlook

RoA/RoE is to expected to be strong at >4%/20% by FY27. Based on the company’s proven execution capabilities, and promising financial outlook, we maintain our Buy rating with a revised price target of Rs. 1,150. The stock currently trades at 4.6x its FY27 BV.

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