Buy Bajaj Finance; target of Rs 8800: Motilal Oswal

Motilal Oswal is bullish on Bajaj Finance recommended buy rating on the stock with a target price of Rs 8800 in its research report dated September 06, 2023.

Broker Research

September 07, 2023 / 12:03 IST

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Motilal Oswal's research report on Bajaj Finance

Bajaj Finance (BAF)’s FY23 Annual Report provides insights into the company’s business construct and the different elements of its Long Range Strategy, including its ambition, approach, philosophy, market share, and profit share. The company plans to execute this strategy by increasing business agility, establishing a more efficient cost structure, and expanding its share of wallet within its customer base. During the challenging period of COVID-19, BAF seized the opportunity to transform its core identity, implementing a fully digitized Omni-channel strategy that seamlessly integrates its entire product and service portfolio. This was a huge structural shift for BAF, completely reinventing its operational approach. Once fully implemented, the omni-channel strategy will establish BAF as a customer-centric digital enterprise. The company delivered a healthy performance in FY23 through (a) effective capital management (Tier I of ~23%), (b) conservative liquidity buffers (~6% of average borrowings in FY23), (c) its strong underwriting capabilities, and (d) significant progress across various aspects of its omni-channel strategy, thereby, further strengthening its risk management capabilities.

Outlook

We estimate an AUM/PAT CAGR of ~29%/26% over FY23-FY25 and expect BAF to deliver a RoA/RoE of 4.6%/25% in FY25. We reiterate our BUY rating with a TP of INR8,800 (premised on 6.5x FY25E BVPS).

For all recommendations report, click here