14 BAJFINANCE share price target reports by brokerages below. See what is analyst's view on BAJFINANCE share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
BFL has exhibited a strong performance in a volatile economic scenario (healthy return ratios - RoA at >3.5%, RoE at ~20%, GNPA at <2%). It is delivering best growth (33% CAGR in AUM), highest margins >10%, strong PAT growth >35% CAGR and trading at top notch valuation multiple of 6.7x FY21E ABV. We believe maintaining these high margins and strong growth hold key for future. We maintain our P/BV multiple to 6.5x FY21E BV and target price of Rs 4350. We change our rating on the stock from BUY to HOLD as the stock has already rallied ~20% post the government’s corporate tax cut announcement.
Valued at 5.8x FY21E BVPS, BFL posted stable performance on headline parameters. However, cautious outlook and the weak demand environment are manifesting challenges. While the strong franchise, impressive operating metrics and strong return ratios work in its favour. Asset quality and growth are key monitorables in the near term. We maintain our Buy rating on the stock with an revised price target (PT) of Rs. 4400.
While lifestyle financing witnessed 30dpd asset deterioration, overall slippages at Rs7.86bn stood under control backed by asset upgrades and sell downs indicative of strongly penetrated collection mechanism. In light of patchy macros and prudency, credit costs guidance has been upped to 175bps for FY20 as against 140bps in FY19. Going forward, higher credit costs should partially be offset with operating leverage benefits and strong business visibility (30% AUM CAGR: FY19-22E) defying market headwinds. Consequently, BAF remains poised to deliver 21.0% ROEs/3.5% RoAs by FY22E. We reiterate BUY rating on the stock valuing Co. at 6.6xPABV Sep’21 estimates arriving at price target of Rs 4,668 (earlier Rs4,681).
Overall, BAF remains comfortable on liquidity front maintaining its robust growth trajectory, with deepening geographical penetration and increasing repeat business. Over the past two years, it has also enhanced its capabilities on two fronts – generating higher fee income and improving the deposit franchise. While we remain positive on the stock, on the back of outstretched valuations we assign‘Hold’ rating on the stock with a target price Rs 3591 (6.5x FY21E P/BV & ~30x FY21E P/E).
We initiate coverage on Bajaj Finance (BAF) with a BUY given formidable franchise in consumer financing, strong growth momentum in rural finance and expected uptick in mortgage business post spin off in step down subsidiary. BAF has emerged strong in the recent NBFC rout given 1) <2% GNPA and 65-70% PCR across cycles, avg. 40% positive ALM gap in short maturity buckets and diversified liability mix. We believe a CAGR of 31% in AUM and stable asset quality will enable 32% PAT CAGR over FY19-21. We expect premium valuations to sustain given ROA and ROE of 3.7%/20.1%, lower ALM risk and strong retail presence in consumer segment. We assign P/ABV multiple of 6.9x FY21E to arrive at price target of Rs 3,860.
Maintain rating and valuation; Trim earnings by 3%/2% in FY20/21E We have trimmed our earnings estimates by 3%/2% in FY20/21E to factor the higher credit costs. We believe it is likely to remain 30%+ growth company in the near and medium term. We maintain our rating and multiple, valuing it at 6.5x FY21E P/ABV (lower our target price to Rs 3590 from Rs 3700).
Following up with our last view of unsustainability of high growth, valuations, the stock has already corrected 14% from our REDUCE recommendation. We still believe earnings revision and valuation multiple may contract from here on. Asset quality may see further deterioration. Hence, we increase our provisions estimate for FY20-21E and reduce our PAT estimates lower for FY20-21E by 5-7%. We maintain our P/ABV multiple at 5.2x and P/E multiple to 26x. We maintain REDUCE with a target price of Rs 2900 (earlier | 3300). Continuity of high margins in the current environment along with market share in high yielding-low risk consumer segment remain risks to our call.
BFL has exhibited a strong performance in a volatile economic scenario (healthy return ratios - RoA at >3.5%, RoE at ~20%, GNPA at <2%). With best of growth (33% CAGR in AUM), highest margins, strong PAT growth (33% CAGR) and top notch valuation multiple (30x on FY21E EPS) already in the price, we expect further upsides to be capped. Since our initiation, the stock has surged ~7x from | 500 to | 3484 (and up 12% post our last update at | 3200). Factoring in the above aspects, we reduce our P/BV multiple to 5.4x (from 6x earlier) and P/E multiple to 28x from 30x. We downgrade the stock from BUY to REDUCE. Continuity of high margins in current environment and market share in high yielding- low risk consumer segment remain risks to our call.
A strong performance in a volatile economic scenario (healthy return ratios - RoA at >3.5%, RoE at ~20%, GNPA at <2%) has resulted in investor interest continuing even at higher P/ABV and P/E multiples. Strong business momentum is seen at 33% CAGR in both AUM & PAT in FY19-21E to Rs 199903 crore and Rs 7113 crore. BFL’s improving cost to income ratio in Ind-As is 35% in FY19E. Adequate liquidity & limited exposure to IL&FS depict book quality, digitisation benefits and management strength. We revise our TP to Rs 3700 (| 3200 earlier), valuing at ~30x FY21E EPS (6x FY21E ABV). We maintain BUY.
BAF currently trades at 5.9x its FY2021E book value. When viewed in perceptive of high growth and strong asset quality, we believe these premium valuations are sustainable. We introduce our estimates for FY2021E and rollover the price target (PT). We maintain our Buy rating with a revised PT of Rs. 3,400.
Despite the liquidity crunch in the NBFCs sector, BAF’s Q3FY19 performance remained steady. The company continues to deliver high growth on the back of geographical expansion (which helps in reducing risk as well), deeper penetration in existing customers and increasing product offering (across fund and fee-based segments). While favorable asset quality indicators provide tailwinds for strong growth in high-yield segments, the company will need to wind down in case the cycle turns otherwise. BAF’s strong third quarter performance despite a volatile liquidity scenario coupled with healthy return ratios and stable asset quality commands premium valuations. We expect strong growth momentum to continue. This coupled with improving C-I ratio, adequate liquidity & limited exposure to IL&FS will support earnings visibility. We have a Buy on the stock valuing the company at 5.8x FY21EABV arriving at target price of Rs 2927.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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