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Last Updated : Jul 22, 2020 03:32 PM IST | Source: Moneycontrol.com

Hold Bajaj Finance; target of Rs 3050: ICICI Direct

ICICI Direct recommended hold rating on Bajaj Finance with a target price of Rs 3050 in its research report dated July 22, 2020.

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ICICI Direct's research report on Bajaj Finance

The consolidated moratorium book has reduced to Rs 21,705 crore (or 15.7% of AUM) from Rs 38,599 crore (or 27% of AUM) as of April 30, 2020 owing to reduction in bounce rate (declining 3-4% monthly) coupled with better collection efficiency. Moratorium in auto finance segment stayed high at 50% from 70% in April. It decided to convert some of its existing customers with no overdue and good repayment track record from term loan to a flexi loan (old product) for a switch fee. It also has an added feature of only interest servicing for the first one to two years apart from digital repayment options. In Q1FY21, the company converted ~Rs 8,600 crore of term loans into flexi loans.


At 5.2x FY22E ABV, RoE moderating to ~15% and RoA under 3%, the stock looks fairly priced. Lower growth & higher uncertainty warrants being cautious in the near term. Therefore, we continue to maintain HOLD rating and revise our target price to Rs 3050, valuing the stock at ~4.7x FY22E ABV.

For all recommendations report, click here

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First Published on Jul 22, 2020 03:32 pm