Buy Bajaj Finance; target of Rs 8500: ICICI Securities

ICICI Securities research report on Bajaj Finance

Bajaj Finance (Bajaj) is the only NBFC in India that prioritises customer ‘ownership’ over mere ‘lending’. Providing financial solutions to India’s burgeoning aspirational middle class forms the crux of Bajaj’s unique business model, which will allow the business to showcase >25% growth in AUM and RoE in the near future. The company sports the lowest cost of delivery (cost of funds + cost to assets) among NBFCs, which is backed by a strong cross-sell/up-sell engine (cross-sell customer base at >60% of total) and robust digital infrastructure – arm in arm, these form the bedrock of Bajaj’s leadership now and going ahead too in the NBFC space.

Outlook

We initiate coverage with a BUY and TP of INR 8,500 (SoTP), valuing standalone business at 5x FY26E BVPS and INR 830 towards housing subs. We model ~29% AUM CAGR and expect ~19-20% RoE over FY24-26E.