Buy Bajaj Finance; target of Rs 7945: KR Choksey

KR Choksey's research report on Bajaj Finance

Net Interest Income (NII) for Q1FY25 increased by 24.5% YoY (+4.4% QoQ) to INR 83,653 Mn, primarily led by the robust growth in AUM. The NII miss compared to our estimate was 1.5%. Pre-Provision Operating Profit (PPOP) stood at INR 69,475 Mn, a growth of 25.3% YoY (+8.4% QoQ) in Q1FY25. PPOP was 1.0% below our estimates. Profit after tax for Q1FY25 grew by 13.8% YoY (+2.3% QoQ) to INR 38,245 Mn. Higher provisions of INR 16,847 Mn have offset the healthy operating performance. Net profit miss against our estimates was 2.3%.

Outlook

We have lowered our PAT estimates for FY25E/ FY26E by 2.9%/ 2.7% given the expected increase in cost of borrowings and credit costs. We assign a P/ABV multiple of 4.5x on FY26E adj. book value of INR 1,765.5 to arrive at a target price of INR 7,945 per share (earlier INR 8,000). We maintain our “BUY” rating on BAF.

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