Hold Bajaj Finance; target of Rs 9500: Axis Direct

Axis Direct's research report on Bajaj FinanceProfits defy gravity; but valuations lofty Bajaj Finance’s (BAF) Q1 PAT at Rs 4.24 bn (+54% YoY)was ~18%above our estimate, despite additional provisions. AUM grew 40% YoY to Rs 496bn, while headline asset quality slid marginally with GNPA% at 1.47% (+24bps QoQ), as BAF moved to 120dpd NPA recognition. Maintain HOLD with revised TP of Rs 9,500(4.5x FY18E ABV) vs. Rs 7,250 earlier BAF has consistently delivered over and above the management’s guidance for many quarters. Multitude of operational levers put in place and new avenues of growth propped up are likely to ensure that the trend continues. Weretain our earnings estimates but upgrade the multiples (~30% premium to HDFC) to factor in supernormal performance and optimistic outlook. Despite this, our target price works out to Rs 9,500 (4.5xFY18E P/ABV of Rs 2,101), implying4% downside from thecurrent market price.