Buy Bajaj Finance; target of Rs 6200: Motilal Oswal
Motilal Oswal is bullish on Bajaj Finance recommended buy rating on the stock with a target price of Rs 6200 in its research report dated Jun 06, 2021.
June 08, 2021 / 06:38 PM IST
Motilal Oswal's research report on Bajaj Finance
Bajaj Finance Ltd (BAF) has released its mid-quarter update highlighting the impact of the second COVID wave on AUM (INR40-50b, 3% of outstanding AUM) and provisioning (INR11-13b, 0.8% additional credit cost). A large portion of the provisioning is likely to be up-fronted in 1Q. New origination in B2B/other businesses are down to 40/60% vs planned level in May. We have tweaked our estimate based on the revised guidance. Despite an earnings cut of ~11% for FY22, ROEs are likely to be strong at 20%, and we believe the impact is likely to be transient. With the process of unlocking having commenced, the rebound may be equally strong. Reiterate Buy.
BAF’s return ratios have not only been consistent but are also the highest in our Coverage Universe (after that of the gold financiers). Reiterate Buy, with TP of INR6,200 (7x BV FY23).
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