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Last Updated : Jul 30, 2019 12:42 PM IST | Source: Moneycontrol.com

Hold Bajaj Finserv; target of Rs 7280: ICICI Direct

ICICI Direct recommended hold rating on Bajaj Finserv with a target price of Rs 7280 in its research report dated July 26, 2019.

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ICICI Direct's research report on Bajaj Finserv


Bajaj Finserv delivered a healthy performance in terms of topline across segments. However, claims related to cyclone Fani and impairment of exposure to DHFL fixed securities impacted earnings of insurance business. A distinguished business model with focus on affluent masses (consumer durables) led to continued strong in AUM. Led by strong growth in AUM at 41% YoY, commercial finance business continued to see traction with 43% YoY growth in NII at Rs 3688 crore. Provisions including w/off grew 80% YoY for Stage 3 to Rs 421 crore, leading to marginal impact on PAT to Rs 1195 crore, up 43% YoY. Asset quality marginally deteriorated with GNPA ratio at 1.60%, up 6 bps. Slippages were at Rs 702 crore vs. Rs 607 crore QoQ.


Outlook


However, based on unsustainability of high growth and anticipated asset quality pressure in commercial finance business, we revise our target price lower to Rs 7280 (earlier Rs 8500), based on SOTP valuation, implying a multiple of 22.2x on FY21E consolidated earnings. We maintain our HOLD recommendation on the stock.

For all recommendations report, click here

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First Published on Jul 30, 2019 12:42 pm
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