Buy Bajaj Finance; target of Rs 8500: ICICI Securities

ICICI Securities research report on Bajaj Finance

Bajaj Finance (BAF) ended its eight-year-long co-branded credit card partnership with RBL, as per exchange filing (Link). We believe the possible factors behind the end of this partnership include: 1) BAF’s decision to exit the cobranded credit card business given the role of the originator being restricted to only marketing and distribution, without customer ownership. 2) BAF’s strategy to diversify its fee income pool by reducing over-reliance on credit card fees. 3) Monthly RBL co-branded card acquisition volumes were 30,000–40,000 – negligible for its overall P&L size. Considering co-branded RBL card fee income contribution at negligible ~1% of PBT, as per our calculation, we do not foresee a meaningful impact on profitability ahead.

Outlook

We retain BUY with a TP of INR 8,500, valuing the standalone business at 4.7x FY26E BVPS while assigning INR 1,450/share towards housing subs.