Bajaj Finance stock has given decent returns in the past few months. The company’s shares have gained 10% in the last one week and over 30% in the past one month. The stock made a new all-time high on Wednesday at Rs 7,999.90. Analysts at JM Financial expect Bajaj Finance to report a 29% CAGR in AUMs over FY23-25 which should result in a 29% EPS CAGR. The brokerage maintains a ‘buy’ rating on the stock and has raised the target price. Bajaj Finance shares fell over 1% to Rs 7,752 today. At the current price, the company’s market capitalisation stands at Rs 4.7 lakh crore.
Bajaj Finance Growth Outlook
The brokerage expects newer categories (Auto, MFI and other products) to form 6-7% of the overall mix in the next 3 years. While the launch of credit cards still awaits a regulatory green flag, the share of unsecured books forms 42% of the overall mix as of FY23 and is a significant profitability driver for Bajaj Finance. The company’s digital strategy is now falling in place with clear targets wrt payments market share, merchant lending and digital spending and given the strong execution track record. JM Financial expects BAF to emerge as a player to reckon within the space over the next 3-5 years.
Stock Call: Buy Bajaj Finance – JM Financial
Bajaj Finance – Buy – CMP: Rs 7,752 – Target Price: Rs 9,500 (22.5% upside)
“BAF’s transition to a bank is not likely over the medium term, and we also expect the management transition is likely to be a non-disruptive affair with enough bench strength created. Continued execution on growth and the emergence of new profit pools should ensure premium valuations for BAF. We raise our target price to Rs 9,500 valuing BAF at 30x FY25e EPS – we expect Avg RoEs of 25% for FY24-25 with EPS CAGR of 29% over FY23-25,” said analysts.