Stellar performance to continue…
Bajaj Finance Limited (BFL) is one of the leading non-banking financial companies (NBFC) in India and is part of the illustrious Bajaj group. Though BFL started as the captive financier to two and three wheelers manufactured by Bajaj Auto, the company entered various other lending segments and became one of the significant players in the retail asset-financing industry. BFL’s diversified product suite now comprises >19 product lines divided broadly into four categories like consumer, SME, commercial and rural. The company is the largest financier of two-wheelers and consumer durables in India.
Valuation: BFL has delivered healthy operating performance with steady asset quality over the last few years. Hence, we believe that BFL is relatively well positioned within NBFCs space given its well-diversified product portfolio, lower individual product market shares and strong risk management practices. Going forward, we expect BFL’s robust growth momentum and profitability to sustain over the near to medium term. BFL’s premium valuation is also expected to sustain on better earnings visibility and improving return ratios. Hence, we maintain BUY rating on the stock with a target price (TP) of Rs2,000 (P/ABV of 6.0x for FY19E).
Research Report – Bajaj Finance Ltd.
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