Buy Bajaj Finserv; target of Rs 2040: Sharekhan

Sharekhan's research report on Bajaj Finserv

Bajaj Allianz Life Insurance reported strong growth in new business premium APE, up 30% y-o-y, at Rs. 1,620 crore. Value of new business (VNB) grew by 25% y-o-y to Rs. 237 crore. VNB margins stood at 14.6% vs. 15.2% y-o-y. Bajaj General Insurance’s gross written premium grew by 53% y-o-y. Net earned premium grew by 8% y-o-y. Claims ratio increased to 78% vs. 75.5% y-o-y. Combined ratio improved to 95.3% vs. 99.8% y-o-y, led by better expense ratio despite higher claims. Underwriting profit stood at Rs. 37 crore in Q2FY2024 vs. Rs. 18 crore loss in Q2FY2023. On the lending business side, Bajaj Finance reported earnings growth of 28% y-o-y in Q2FY2024, driven by strong operating profit growth and contained credit cost.

Outlook

We maintain our Buy rating on the stock with a revised SOTP-based PT of Rs. 2,040.

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