Buy Bajaj Finance; target of Rs 7600: Sharekhan

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Sharekhan's research report on Bajaj Finance

Bajaj Finance reported another strong quarter with healthy operating performance. PAT stood at Rs. 2,596 crore (on consolidated basis), up ~159% y-o-y and ~7% q-o-q versus our estimate of Rs. 2,182 crore, on account of higher provision expectations. Asset quality continued to witness significant improvement with stage 3 assets at 1.25%, down ~35 bps q-o-q. The management expects the GNPA and NNPA ratios to trend lower going ahead. Consolidated AUM grew by 28% y-o-y and 3% q-o-q to Rs. 2.04 trillion in Q1FY2023. The company plans to grow its AUM to Rs. 4 lakh crore by FY2025. The company plans to be fully digital across all its products on application by March 2023. At the CMP, the company trades at 7.2x its FY2023E P/BV.

Outlook

We maintain our Buy rating on the stock with a revised PT of Rs. 7,600.

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Bajaj Finance - 280722 - khan