Purchase Bajaj Finserv with a 2040 goal in mind: Sharekhan

 Purchase Bajaj Finserv with a 2040 goal in mind: Sharekhan

In their research report dated October 30, 2023, Sharekhan expressed optimism about Bajaj Finserv, recommending a buy rating on the company with a target price of Rs 2040.

The research report on Bajaj Finserv by Sharekhan

At Rs. 1,620 crore, Bajaj Allianz Life Insurance recorded a 30% year-over-year increase in new business premium APE. To reach Rs. 237 crore, value of new business (VNB) increased by 25% year over year. Y-o-y, VNB margins were 15.2%, compared to 14.6%. Gross written premium for Bajaj General Insurance increased by 53% year over year. Net earned premium increased annually by 8%. The claims ratio went from 75.5% year over year to 78%. A superior expenditure ratio drove the combined ratio's improvement to 95.3% from 99.8% year over year, despite higher claims. In Q2FY2024, underwriting profit was Rs. 37 crore, as opposed to a loss of Rs. 18 crore in Q2FY2023. Regarding lending, Bajaj Finance saw a 28% year-over-year increase in profitability in Q2FY2024, primarily due to robust growth in operational profits and controlled credit costs.

Prospects

We continue to recommend buying the stock, with a revised PT of Rs. 2,040 based on SOTP.