Buy Bajaj Finance; target of Rs 9451: KR Choksey

KR Choksey's research report on Bajaj Finance

Net Interest Income (NII) for Q3FY25 rose 22.6% YoY (+6.2% QoQ) to INR 93,826 Mn, driven by strong AUM growth (in line with our estimates). Pre-Provision Operating Profit (PPOP) increased 27.1% YoY (+6.8% QoQ) to INR 78,057 Mn, surpassing our estimates by 3.3%. Profit after tax grew 18.4% YoY (+7.3% QoQ) to INR 43,082 Mn, with higher provisions of INR 20,433 Mn partially offsetting the strong operating performance. Net profit exceeded our estimates by 2.7%. By leveraging cutting-edge technologies such as Generative AI, the company is streamlining processes, optimizing cost structures, and improving customer engagement. We lower our PAT estimates for FY26E/ FY27E by 3.0%/ 0.5%, considering a slight increase in the provisions.

Outlook

We roll over our valuation to FY27E and assign a P/ABV multiple of 4.5x on FY27E adj. book value of INR 2,100.1 to arrive at a target price of INR 9,451 per share (earlier INR 8,066). We maintain our “BUY” rating on BAF.

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