Buy Bajaj Finserv; target of Rs 2350: Sharekhan

Sharekhan's research report on Bajaj Finserv

APE growth was slower at 6% y-o-y versus an 18% y-o-y growth in 9MFY25 led by weak the agency channel. However, VNB grew by 14% y-o-y; VNB margins improved to 22.1% vs 18.1% y-o-y led by a better product mix. Bajaj General Insurance’s GWP (ex-crop & govt health business) was flat y-o-y on accounting adjustments and slower growth in commercial and group health business. Combined ratio was higher at 104.8% vs 101.6% despite moderation in claim ratio mainly due to higher expense ratio impacted by the 1/n rule. Bajaj Finance’s earnings growth was healthy (in-line) at 19% y-o-y but the management has revised guidance for FY26 slightly on the lower side with respect to the return ratio and AUM growth.

Outlook

We maintain a Buy with an unchanged SOTP-based PT of Rs. 2,350 factoring in subsidiaries’ performance.

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