YES Securities' research report on Bajaj Finance
BAF delivered a largely in-line operating performance with a mild 3% miss on PPOP and PAT due to higher opex (up 13% qoq/73% yoy) that represented continuous investment in people and tech for growth and profitability expansion. Core AUM growth and customer franchise addition was reasonably strong. Asset quality improved across products, underpinning moderate credit cost. NII growth/NIM movement was on expected lines, but CoF reduction was a surprise. FY23 guidance on every metric is encouraging viz. a) co. is confident of adding 9-10mn new customers, b) NPL levels expected to further come down and credit cost estimated at 1.35-1.45% of avg. assets, c) NIMs to be maintained with gradual rise of CoF and lending rates hikes and d) Opex/NII to start tapering from H2.
Hold a constructive view on BAF with a 12m PT of Rs8140. Earnings estimates have seen some upgrade, but we have moderated target multiple to reflect eventual conversion into a bank.
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