KR Choksey's research report on Bajaj Finance
Net Interest Income (NII) for Q2FY23 increased by 31.2% YoY (+5.4% QoQ) to INR 69,970 Mn; for H1FY23, NII stood at INR 1,36,388 Mn, a growth of 38.8% YoY. Pre-Provision Operating Profit (PPOP) stood at INR 44,865 Mn, a growth of 35.8% YoY (+5.4% QoQ) in Q2FY23; the cost-to-income ratio for Q2FY23 was sequentially stable at 35.9%, while improved by 213 bps YoY. Profit after tax for Q2FY23 increased by 87.8% YoY (+7.1% QoQ) to INR 27,807 Mn from INR 25,963 Mn in Q2FY22. Gross NPA and Net NPA as of September 30, 2022, stood at 1.17% and 0.44%, respectively, against 1.25% and 0.51% as of June 30, 2022. The capital adequacy ratio (including Tier-II capital) as of June 30, 2022, was 25.1%. The Tier-I capital was 23.1%. The stock is currently trading at 8.5x/6.9x P/ABV multiple for FY23E/FY24E Adjusted Book Value.
Outlook
We assign a P/ABV multiple of 8.2x on FY24E adj. book value of INR 1,059 to arrive at a T.P. of INR 8,630 per share, an upside of 16.1% over CMP. Accordingly, we maintain our “BUY” rating on BAF shares.
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