These two Bajaj Twins – Bajaj Finance and Bajaj Finserv have been on investors’ radar following the Q2 results announcement. In fact, both stocks saw steady investor support in Wednesday’s trade. But can the stocks surge even higher? International brokerage house Jefferies raised the target price for both and sees as much as 28% upside potential in one of these.
Jefferies on Bajaj Finance: Among top picks
Jefferies raised the target price on Bajaj Finance to Rs 1,270 from Rs 1,100, implying an upside of 17% from current levels, while retaining the ‘Buy’ call. The company’s AUM grew by 24% YoY, and the festive season went well. However, the company’s management still slashed growth guidance by 100 basis points to 22-23% due to weaker trends in SME & housing. Bajaj Finance’s credit costs rose this quarter, but with improving trends, it can moderate.
Apart from that, the company has elevated Manish Jain as the 4th Deputy CEO, and further clarity on Management succession will be shared over the next 12-18 months. “We believe Bajaj Finance continues to be amongst the best platforms to play growing consumption spending and commercial finance,” said Jefferies.
Jefferies on Bajaj Finserv: Risk-to-reward ratio attractive
The brokerage house raised the target price on Bajaj Finserv as well to Rs 2,710 from Rs 2,420, implying an upside of 28% from the current market price. The brokerage firm retained a ‘Buy’ rating on the stock.
Bajaj Allianz General Insurance Company’s premium rose by 9% YoY, and the Combined Operating Ratio (COR) was 102%. The rise in COR was due to the impact of 1/n, adjusted for which, COR was flat YoY at 101%. In the near term, clarity on some Government business will be key, said the brokerage firm.
Bajaj Allianz Life Insurance Company (BALIC) saw a 47% rise in Value of New Business (VNB) as portfolio actions lifted margins. Bajaj Finance’s profit rose by 23%, but the cut in growth guidance disappointed Jefferies. Bajaj Finserv’s holding company discount has risen to 27%, making risk-to-reward attractive.
