Bajaj Finance - Q3 Growth momentum continues - ENAM

Q3 performance was in line with our expectation led by 11% QoQ AUM growth and improving profitability. PAT at Rs 1.6 bn (up 33% YoY) was above our estimate of Rs 1.5 bn. Asset quality was stable with net NPA at 0.2% but management indicated Commercial Finance portfolio continues to see stress. Consumer and SME segments remain key growth drivers as Bajaj Finance (BAF) gained market share in 2-wheelers (30% of Bajaj Auto's domestic sales vs. 24% in FY12) and Consumer Durables (14% in 9MFY13 vs.11% in FY12).

We have factored in Rs 7.5 bn of capital infusion in FY13 (announced rights issue at Rs 1,100 in 3:19 ratio). We revise our ABV by 13% in FY13 to Rs 686 (Rs 607 earlier) and by 8% in FY14E to Rs 815 (Rs 752 earlier). We introduce FY15 estimates and roll forward our TP to FY15E ABV. Our revised TP stands at Rs 1,711 (1.8x FY15E ABV of Rs 957) vs. Rs 1,500 earlier. Our TP implies 22% upside from CMP of Rs 1,404. Maintain BUY.

At CMP, the stock trades at 2.0x FY13E ABV of Rs 686 and 1.7x FY14E ABV of Rs 815 and 1.5x FY15E ABV of Rs 957.

Source : Equity Bulls

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