Buy Bajaj Finance; target of Rs 8631: Geojit

Geojit's research report on Bajaj Finance

Bajaj Finance Ltd (BFL) is a leading non-banking financial company (NBFC) in India. It lends to retail, SME and commercial customers, and accepts public and corporate deposits. In Q2FY24, Gross interest income grew by 34.2% YoY and interest expenses grew by 52.7% YoY due to high cost of borrowing. Resultantly, Net interest income (NII) grew 26.3% YoY to Rs 8,841cr this quarter. PAT increased 27.7% YoY, despite 46.7% YoY rise in provisions. Asset quality remained strong in Q2FY24, with 34.3% YoY growth in the loan book and improvement in non-performing asset (NPA) levels. BFL is expected to capture a robust industry share in the near term driven by enlarged customer base, diversified product portfolio and strong pan-India presence.

Outlook

Stable asset quality and increase in assets under management (AUM) should boost growth in the upcoming quarters. Therefore, we reiterate our BUY rating on the stock with a revised target price of Rs. 8,631 based on 6.1x FY25E BVPS.