Bajaj Finance - Q1 FY22 Result Report - YES Securities

(Rating: ADD, TP: Rs5,800, Downside: 2%)

Q1 earnings negatively surprised; Management commentary and Business Transformation holds promise

- Key sources of earnings disappointments were large interest reversal and higher credit cost

- Resilient AUM growth was supported by nearly stable bounce trends and sharp recovery in business segments of Consumer B2C, Rural Finance and Mortgages in the month of June.

- Sans a severe third Covid wave, BAF expects a strong recovery in business and delinquent buckets in the rest of the year. It has guided for annual credit cost of Rs42-43bn, implying a sharp earnings recovery over next three quarters

- Though we cut earnings and BV estimates; BAF's business transformation strategy which can structurally augment growth and improve cost metric, could support stock's current high valuation multiple (7x FY23 P/ABV).

Shares of Bajaj Finance Limited was last trading in BSE at Rs. 5937.9 as compared to the previous close of Rs. 6012.75. The total number of shares traded during the day was 50657 in over 7227 trades.

The stock hit an intraday high of Rs. 6028.8 and intraday low of 5868.45. The net turnover during the day was Rs. 302018233.

Source : Equity Bulls

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