Buy Bajaj Finserv; target of Rs 1950: Sharekhan

Sharekhan's research report on Bajaj Finserv

Bajaj Allianz Life Insurance reported strong growth in Annualized Premium Equivalent(APE) which grew by 29% YOY driven by strong growth in individual APE by 31% YoY. VNB (Value of New business) margins expanded to 15.2% in Q2FY23 vs 13.9% in Q2FY22 led by a better product mix towards non-par. While, for Bajaj General Insurance, gross written premium decreased by 5% YoY. Excluding crop segment, it grew by 13% YoY led by group health (33%) and commercial line (12%). It reported muted growth in the motor segment (4% YoY) as well as the retail health segment (9% YoY). The company is focusing on better profitability here and maintaining a cautious stance in select segments with high pricing pressure like motor OD. On the lending side, Bajaj Finance reported steady performance for Q2FY23 driven by robust AUM growth (31% YoY/ 7% QoQ) and contained credit cost.

Outlook

We maintain our Buy rating on the stock with an unchanged SOTP-based PT of Rs. 1,950.