Moneycontrol PRO
UPCOMING EVENT:Attend Traders Carnival Live. 3 days 12 sessions at Rs.1599/-, exclusive for Moneycontrol Pro subscribers. Register now!

Buy Bajaj Finance; target of Rs 7700: Motilal Oswal

Motilal Oswal is bullish on Bajaj Finance recommended buy rating on the stock with a target price of Rs 7700 in its research report dated August 25, 2021.

August 26, 2021 / 12:29 PM IST
HDFC Securities research report's outlook and valuations:  500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Motilal Oswal's research report on Bajaj Finance


Bajaj Finserv has got an in-principle approval from SEBI for sponsoring a Mutual Fund (MF). While the opportunity is huge, given the under penetration and financialization of savings in the country, the competitive intensity in the industry is high with 44 players. Bajaj Finserv has inherent advantages in its business model, given its presence in the Retail Finance, Life Insurance, General Insurance, and Securities businesses. Strong brand presence and wide distribution reach are key pillars for garnering AUM, where BAGIC, BALIC, and BAF have proved their expertise. Cross-sell to the existing customers of these businesses is a huge opportunity. Technology investments will be a key differentiator, given the emergence of new-age Fintech players. Akin to the strong growth displayed in other lines of businesses, Bajaj Finserv will be able to deliver an industry-leading growth in the AMC business as well. Barring any new COVID-related disruptions, we expect BAF to deliver ~21% AUM growth in FY22E and 25% CAGR thereafter. This Financial Services group already had Lending products, General and Health Insurance, Life Insurance, and Broking services. With an AMC in the fold, the missing piece of a captive MF investment product (other than deposits/traditional savings/ULIP products) will also be complete. This should aid the fee and commission (particularly distribution) income of BAF, which was already exhibiting high growth until Mar'20 when COVID-19 struck.



Outlook


We expect BAF to deliver ~4.8% RoA/23% RoE over the medium term. Given the positive outlook, we maintain our BUY rating, with a TP of INR7,700 per share (8x 1HFY24E BVPS).


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.

Broker Research
first published: Aug 26, 2021 12:29 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark