Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessStocks

Hold Bajaj Finserv; target of Rs 4800: ICICI Direct

ICICI Direct recommended hold rating on Bajaj Finserv with a target price of Rs 4800 in its research report dated May 26, 2020.

May 26, 2020 / 01:48 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on Bajaj Finserv

Bajaj Finserv reported a steep fall in earnings due to lower premium accretion coupled with surge in Covid related contingent provision & MTM losses on equity investment. Consolidated topline was flat at 2% YoY to Rs 13294 crore, primarily led by slower traction in premium accretion in insurance business that was offset by healthy traction in lending business. Bajaj Finance, lending arm, made a contingent provision of Rs 900 crore amid Covid-19, while insurance business took a MTM hit of Rs 768 crore on equity investment, led by steep decline in value of equity market. This has led to a 63% YoY decline in PBT to Rs 793 crore. Resultantly, consolidated PAT came at Rs 194 crore, down 77% YoY. Excluding the provision for Covid-19, PAT would have been Rs 1000 crore.


Outlook

Management’s focus to remain profitable on underwriting basis rather than investment income provides confidence. Factoring the changed scenario, we cut our earnings estimates by ~18% for FY22E. Lower growth & higher uncertainty on asset quality warrant being cautious in near term till clarity on lockdown and moratorium behaviour emerges. Hence, we downgrade the stock to HOLD with revised target price of Rs 4800/share, based on SOTP valuation, implying a multiple of ~16x on FY22E consolidated earnings.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: May 26, 2020 01:48 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347