Jefferies advised a ‘Buy’ on Bajaj Fin with a target of ₹9,470. However, RBI’s unexpected directive halted loan sanction and disbursal for two digital loan products, posing a negative impact. The swift correction pace is crucial for product reinstatement. Despite this setback, the financial impact seems limited, as the Insta EMI Card base accounts for only 5% of total clients, estimating the base at 0.2% of disbursals.

Bajaj Finance analysis by global brokerages:

Morgan Stanley holds an ‘Overweight’ stance, targeting ₹10,300, expecting negligible financial impact. They note that the acquisition of new digital EMI cards seems unaffected, foreseeing near-term stock pressure. However, they anticipate a prompt resolution, mitigating the EPS impact.

CITI remains ‘Neutral’ with a TP of ₹8,375. RBI’s embargo on ‘eCOM’ and ‘Insta EMI Card’ necessitates corrective actions, with a detailed review of KFS underway. The active Insta EMI CIF, constituting 10.1% of the Active CIF, faces the halt. H1FY24 witnessed 13.4mn digital Insta EMI Cards, reflecting a monthly issuance of ~220k.

CLSA maintains a ‘Buy’ with a TP of ₹9,500, viewing RBI’s directive as an operational breach rather than a major violation. They estimate a 6% profit impact during the ban period.

Motilal Oswal retains buy

Motilal Oswal maintains a ‘Buy’ stance on Bajaj Finance despite RBI’s identified deficiencies in the digital lending guidelines. These operational issues within KFS, according to BAF, won’t significantly impact finances. The RBI’s stringent oversight reflects its commitment to enforcing compliance, potentially affecting AUM growth and fee income in the second half of FY24. However, Motilal Oswal affirms a positive long-term outlook, suggesting stock correction as a chance to accumulate.

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