Buy Bajaj Finserv; target of Rs 1650: Sharekhan

Sharekhan's research report on Bajaj Finserv

Bajaj Allianz Life Insurance reported strong growth in individual rated new business (IRNB) premium at 48% y-o-y. Value of New Business (VNB) grew by 35% y-o-y to Rs. 415 crore led by an improved product mix. VNB margins were at 18.6% in Q4FY23 versus 19.4% in Q4FY22. Bajaj General Insurance’s gross direct premium income grew by 14% y-o-y. Net earned premium was flat y-o-y. Claims ratio were lower at 66.4% vs 72.1% qoq and 68.8% y-o-y. Combined ratio at 97.3% vs 98.3% y-o-y and 100.3% q-o-q. Underwriting losses stood at Rs. 2 crore versus Rs. 9 crore profit in Q4FY22 and Rs 40 crore loss q-o-q. On the lending business side, Bajaj Finance reported solid earnings growth at 31% y-o-y in Q4dFY23 driven by strong operating profits growth and benign credit cost.

Outlook

We maintain a Buy rating on the stock with an unchanged SOTP-based PT of Rs. 1,650.