Buy Bajaj Finserv; target of Rs 2075: KR Choksey

KR Choksey's research report on Bajaj Finserv

Consolidated revenues for Q3FY25 stood at INR 320,418 Mn, up 10.3% YoY but down 4.9% QoQ, missing our estimates due to slower growth in insurance income. The company reported a consolidated profit of INR 22,310 Mn, marking a 3.4% YoY increase (+6.9% QoQ). The cost-toincome ratio improved to 69.6% from 71.6% in Q2FY25. Earnings missed our estimates by 3.4%, primarily due to lower-than-expected operating profits. PAT was impacted by an unrealized Mark-to-Market (MTM) loss of INR 2,750 Mn on equity investments measured at fair value through profit and loss for BALIC and BAGIC in Q3FY25, compared to an MTM gain of INR 1,070 Mn in Q3FY24. Additionally, a realized MTM loss of INR 370 Mn was booked in OCI during the quarter, versus a loss of INR 190 Mn in Q3FY24.

Outlook

We raise our target price to INR 2,075 per share (from INR 1,995) as we roll over our valuation to FY27E. While we expect a gradual scaleup in new businesses over the coming quarters, breakeven may take time. We maintain our “BUY” rating, with the revised target price implying an upside of 19.5%.