Comments
Cholamandalam Sec
Bajaj Finance (Marketperformer)
CMP: ₹1,291.50
Target: ₹1,375
Bajaj Finance registered a robust growth in its AUM (36 per cent y-o-y, 4.5 per cent q-o-q) to ₹60,200 crore in 4QFY17, led by sound growth in segments such as consumer (43 per cent y-o-y), commercial (52 per cent y-o-y) and rural (129 per cent y-o-y). Consequently, the AUM mix stands at consumer 45.1 per cent , SME 36.7 per cent , commercial 13.1 per cent and rural segments 5.1 per cent .
Valuation: Bajaj Finance has shown consistent earnings growth despite the impact of demonetisation, stable asset quality and healthy return ratios. However, the stock is trading at a rich valuation of 4.8X P/BV of FY19E. At such steep valuations, as the strong growth estimates are already priced in, we maintain our rating on the stock as ‘Marketperformer’ with a target price of ₹1,375 assigning a P/BV of 4.6x FY19E.
Risks: Deterioration in asset quality, given high exposure to commercial, consumer and SME segments.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.