Bajaj Finance Ltd., incorporated in the year 1987, is a Large Cap company (having a market cap of Rs 358646.71 Crore) operating in NBFC sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 6743.01 Crore, down -1.63 % from last quarter Total Income of Rs 6854.94 Crore and up 1.40 % from last year same quarter Total Income of Rs 6649.74 Crore. Company reported net profit after tax of Rs 1002.44 Crore in latest quarter.
Investment Rationale
Despite the transitory deterioration in asset quality and resultant high credit costs, 1QFY22 was a decent quarter for BAF. Customer acquisitions and new loans booked were healthy even in a pandemic-disrupted quarter. COVID-related disruptions are known unknowns, and the quantum of impact on disbursements / asset quality is difficult to ascertain. In the context of the strong recovery seen in Jul’21, the brokerage expects BAF to be able to deliver pre-COVID levels of quarterly run-rate in AUM growth for the remainder of FY22. Provided there is no new COVID wave, the brokerage expects BAF to contain credit costs at ~2.6% in FY22. Margins are likely to see a sharp improvement in FY22 on a) lower cost of funds, b) reduced liquidity, and c) a favorable base due to interest reversals. It updates estimates to factor in the underperformance in 1QFY22 and expect BAF to deliver ~4.8% RoA / 23% RoE over the medium term. Given the positive outlook, it maintains BUY rating with TP of INR6,750 per share (7x 1HFY24E BVPS).
Promoter/FII Holdings
Promoters held 56.1 per cent stake in the company as of March 31, 2021, while FIIs held 24.2 per cent, DIIs 9.1 per cent and public and others 10.6 per cent.
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