CLSA has reiterated its ‘outperform’ call on Bajaj Finance, setting a target price of ₹9,200 per share, implying a 19% upside from the current market price of ₹7,748.00. Despite facing headwinds in the past three quarters, including profit growth lagging behind loan growth, CLSA remains positive on the company’s long-term outlook.
The report cites challenges such as the Reserve Bank of India’s ban, which resulted in a ₹200 crore hit to quarterly fee income, and net interest margin (NIM) compression. Additionally, higher credit costs are expected to take another 1-2 quarters to normalize.
However, CLSA believes that even if Bajaj Finance raises its credit cost guidance to 2%, the estimated FY25 earnings per share (EPS) would decline only by 1-1.5%. Over the next 1-2 years, the company’s focus will be on maintaining superior loan growth and leveraging its operational strengths.
CLSA also points to the recent blockbuster listing of Bajaj Finance’s subsidiary, which has resulted in the parent company trading at a lower multiple than the consolidated entity, providing further growth opportunities.
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