Bajaj Finserv shares: IIFL maintains ‘Add’ rating on the stock. Key triggers

Domestic brokerage and research firm IIFL hosted the senior management of Bajaj Finserv Ltd for investor meetings in the USA. The brokerage in a note said that the company's management highlighted that the Group is investing to create an ecosystem that could future proof their businesses in the long term. 

“Insurance businesses are firing on all cylinders investments in finance and health platforms would create extensions that would be value accretive over the next decade. We forecast BAGIC/BALIC to grow PAT/VNB at 23%/37% CAGR over FY22-25ii, while BAF would grow its EPS by 33% CAGR. Further, the stock offers optionality from investments in its fintech and health platforms, and the upcoming asset management business,” the note stated.

The brokerage has maintained its ‘Add’ rating on Bajaj Finserv shares with a 12-month target price of ₹1,720 apiece. Last month, the company started trading ex-split and bonus after announcing the stock split or sub division of equity shares in the ratio of 1:5 as well as gave its nod for the issuance of bonus shares in the ratio of 1:1.

Bajaj Finance intends to build an ecosystem, which will preserve customer cohort across various businesses, through their fintech platform (Bajaj Markets) and health-tech platform (Finserv Health), so that customers may not have to look around for products, which BJFIN doesn’t offer directly. They would also be launching their mutual fund business later this year, IIFL added.

“Over the past 2 decades, Bajaj Allianz General Insurance (BAGIC) has built an enviable distribution that separates them from competition. They believe market combined ratios may worsen in the wake of rising competition, and BAGIC is well placed to capitalise on market-share gains. They have been leaders in innovation and commanded industry leading share in the sector’s profit pool. We forecast GDPI/EPS CAGR of 16/23% over FY22-25ii, led by improvement in combined ratios,” it added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.