Sharekhan's research report on Bajaj Finance
Bajaj Finance Ltd (BFL) reported mixed Q1FY20 numbers, with tepid business growth, but asset quality improved sequentially, and the moratorium share fell to 15.7% of AUM from 27% which is a positive. Adopting a conservative and prudent provision policy, creating additional reserves will help the bank meet challenges on asset quality going forward. Hence, an additional Rs. 1,450 crore COVID-19 provisions (total COVID19 provisions stands at 1.7% of AUM as of June 2020) provides comfort. For Operating performance was strong with PPOP growth of 26% y-o-y aided by cost control, causing cost-to-income (C/I) ratio to fall to 28%. Asset quality improved sequentially with gross NPA and net NPA at 1.40% and 0.50% respectively, from 1.61% and 0.65% in Q4FY20. With a strong balance sheet, robust risk management and prudent management, BFL is a strong franchise for the long term and is well-placed to ride over medium term challenges.
Outlook
We maintain a Buy rating on Bajaj Finance with a revised price target of Rs. 3,800.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
