Buy Bajaj Finance; target of Rs 8300: Sharekhan

Sharekhan's research report on Bajaj Finance

BAF reported a mixed performance in Q1FY2025. Higher-than-expected NIM compression (down 25bps q-o-q) and elevated credit cost (1.9%, up 32bps q-o-q) led to lower earnings growth, partially offset by strong AUM growth and contained opex growth. Credit cost has been higher primarily due to muted collection efficiencies, and it may remain at current levels in Q2 also but should start to normalise from Q3.NIM is likely to bottom out in H1FY2025. Growth guidance remains intact, which is a key positive.

Outlook

We retain our BUY rating with a reduced PT of Rs. 8,300, with reducing P/B multiple. At the CMP, the stock trades at 4.9x/4.1x its FY2025E/FY2026E BV estimates.

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