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Buy Multibagger NBFC Stock With Rs. 8,250 Target Price, Reports Robust 28% AUM Growth: Axis Securities
Bajaj Finance has reported a robust 28% YoY and 3% QoQ AUM growth in Q1FY23, driven by continued traction in the rural segment, SME loans and mortgages. Leading brokerage firm Axis Securities has recommended buying the stock of Bajaj Finance. The multibagger stock has given a 267.68% upside in the last 5 years.
Stock To Buy: Target Price
The Current Market Price (CMP) of Bajaj Finance is around Rs. 7,336. Axis Securities has estimated a Target Price for the stock at Rs. 8,250. This stock has the potential to give a 12% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 436,078 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 7,336 |
| Target Price | Rs. 8,250 |
| Potential 1 year return | 12.00% |
| 52 week high share price | Rs. 8,050 |
| 52 week low share price | Rs. 5,220 |
Growth prospects
The customer addition momentum remained strong with the highest-ever customer addition during the quarter, leading to customer base growth of 20% YoY and 5% QoQ. BAF plans to scale up its gold financing business moving forward by expanding its geographic reach and aims to improve its contribution to the overall portfolio. Moreover, the launch of non-captive two-wheeler financing in July, 22 along with plans to foray into new auto loans in FY24 would further support AUM growth.
Stock Upside - outlook and value
"The company's digital initiatives and business transformation are key positives to look forward to and are currently progressing well with sequential improvement visible across metrics. With the digital transformation journey likely to be completed by FY23, we believe it should contribute meaningfully to overall growth. We believe the marginal compression in NIMs will be offset by improved fee income, improving Opex ratios, and stable credit costs, thereby enabling BAF to deliver superior return ratios," stated Axis Securities.
Strong Operating Performance
In Q1FY23, the company's operational performance was robust driven by strong growth and improved NIMs (+102bps YoY), even as Opex ratios remained elevated. Going forward, though BAF is expected to witness a slight margin compression, improving cost ratios with operating leverage kicking in along with stable credit costs should drive the company's RoA growth.
Company Portfolio
Bajaj Finance (BAF) is one of India's largest NBFCs for consumer finance with a wide product portfolio comprising loans for two/three-wheelers, consumer durables, housing, and small businesses, among others. The company caters to a customer base of 60.3 Mn and operates its business through 1,368 urban and 2,218 rural lending branches with over 1.3 Lc distribution points.
Disclaimer
The above stock was picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
