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 22% y-o-y, at Rs. 1,727 crore. VNB grew 19% y-o-y to Rs. 251 crore. VNB margins stood at 14.5% vs. 14.8% y-o-y. Bajaj General Insurance’s gross written premium grew 19% y-o-y. Net earned premium grew 13% y-o-y. Claims ratio increased to 72.9% vs. 72.1% y-o-y. Combined ratio also inched up to 102.9% vs. 100.3% y-o-y. Underwriting loss stood at Rs. 85 crore in Q3FY2024 vs. Rs. 40 crore loss in Q3FY2023.

Outlook

Bajaj Finance reported earnings growth of 22% y-o-y in Q3FY2024 despite strong AUM growth of 35% y-o-y, mainly led by higher credit cost and margin pressure. We maintain Buy with an unchanged SOTP-based PT of Rs. 2,040.