The Bajaj Finserv share price is seeing steady gains today. This is after Jefferies initiated coverage with a Buy rating and price target of Rs 2,420 per share. The international brokerage house believes that the holdco of the Bajaj Group’s financial businesses is poised to benefit from tailwinds of lower rates for Bajaj Finance, improving profitability in Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance Company’s growth in profitability.
Bajaj Finserv is investing in new ventures like Bajaj Asset Management, Bajaj Finserv Health & Bajaj Finserv Direct. According to Jefferies, new ventures like mutual funds, healthcare, tech can add option value for the counter.
Jefferies on Bajaj Finserv: New ventures to benefit
Though Bajaj Finsev’s latest investment in Bajaj Asset Management, Bajaj Finserv Health & Bajaj Finserv Direct are small right now and still incurring losses, Jefferies “values the stake in the AMC based on 4% of the projected AUM for September 2027 at Rs 2,600 crore, (Rs16/share).”
While they haven’t made explicit valuation for healthcare & other businesses (as they are in early stages), Jefferies believes that the “opportunity in these sectors is large that the group can leverage through execution & cross-sells.”
Jefferies on Bajaj Finserv: Betting on Bajaj Finance’s strong growth
As per Jefferies’, they are deriving 73% of Bajaj Finserv’s price target from Bajaj Finance’s strong growth & profits.
Bajaj Finserv owns 51% stake in Bajaj Finance. According to a forecast by Jefferies, “Bajaj Finance is seeing 23% CAGR in loans over FY25-FY28 and expect improvement in NIMs from a fall in interest rates.” They also believe that the pressure on asset quality from the SME segment is manageable, “assuming tariff-related issues are resolved soon.”
They are projecting an annual profit growth of 16% CAGR between FY25-FY28 for Bajaj Finance. This is one of their top NBFC picks and the price target for Bajaj Finance share price is at Rs 1,100 per share.
Jefferies on Bajaj Finserv: Bajaj Allianz General Insurance among profitable General Insurance cos
Jefferies is deriving 16% of Bajaj Finserv’s price target from Bajaj Allianz General Insurance’s profitability outlook. After the recent transaction, Bajaj Finserv’s stake in Bajaj Allianz General Insurance is set to increase to 75%.
Jefferies sees this adding value to Bajaj Finserv’s numbers, as they believe that Bajaj Allianz General Insurance is among the most profitable general insurance firms. They consider it as an agile firm “moving in/out of segments to deliver growth and profitability. We see 15% CAGR in premiums over FY25-FY28.” They value Bajaj Allianz General Insurance at Rs 382/share based on FY27 PE estimates.
Jefferies on Bajaj Finserv: Bajaj Allianz Life Insurance VNB margins set to improve
Jefferies is deriving about 11% of Bajaj Finserv’s target price from Bajaj Allianz Life Insurance’s valuation. Its stake in the life insurance segment is set to increase to 75%. The Life Insurance company is taking steps to improve profitability through a combination of portfolio changes, better pricing of ULIPs, more protection attachment & cost controls. According to Jefferies, “this can lift VNB margin from 15% now to 18-19% by FY28.” They value the life insurance business at Rs 258/share based on appraisal value.
Overall, Jefferies sees Bajaj Finserv “well poised to leverage its lending & non-lending platforms and is relatively insulated from economic cycles.” They see lower credit cost offering upside risks to their projections. However, aggressive expansion by competition is a key risk.