Bajaj Finserv (BAFINS) | 5443

[Pages:5]Company Update

August 29, 2017

Rating matrix

Rating Target Target Period Potential Upside

What's Changed? Target EPS FY18E EPS FY19E Rating

Buy | 6000 12 months

10%

Changed from | 5170 to | 6000 Unchanged at | 202.2 Unchanged at | 253.9 Unchanged

Key Financials

| Crore

FY17E

Revenue

24,522.8

PBT

4,924.5

Net Profit

2,261.9

EPS (|)

142.2

FY18E 29,330.4 6,298.3 3,217.6

202.2

FY19E 35,583.8 7,870.1 4,040.1

253.9

FY20E 43,520.0 10,008.3 5,069.3

318.6

Valuation summary

FY17E

P/E

39.5

Target P/E

42.2

P/ABV

5.6

Target P/ABV

6.0

RoE

15.5

RoA

1.9

FY18E 27.7 29.7 4.7 5.0 18.5 2.2

FY19E 22.1 23.6 3.9 4.1 19.2 2.4

FY20E 17.6 18.8 3.2 3.4 19.8 2.5

Stock data Particular Market Capitalization Net worth 52 week H/L (|) Equity capital Face value DII Holding (%) FII Holding (%)

Amount | 87269 crore |14499 crore

5625/2515 | 80 Crore

| 5 5.8 6.1

Price chart

10,500 9,000 7,500 6,000 4,500 3,000 1,500

0

6,000 5,000 4,000 3,000 2,000 1,000 0

Sep-15 Nov-15 Jan-16 Mar-16 May-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17

BJFIN IN Equity

Research Analyst Kajal Gandhi kajal.gandhi@ Vishal Narnolia vishal.narnolia@ Vasant Lohiya vasant.lohiya@

NIFTY Index

Bajaj Finserv (BAFINS)

| 5443

Growth to persist on fundamental strength...

Bajaj Finserv is a financial conglomerate that is engaged in life insurance, general insurance, consumer finance and other financial products. The company has 74% stake in two insurance companies viz. Bajaj Allianz Life Insurance Company (BALIC) and Bajaj Allianz General Insurance Company (BAGIC) and 57.3% stake in Bajaj Finance. Bajaj Finserv's stock has been on a continuous uptrend on the bourse nearly doubling in last 12 months and increasing 39% in last three months. This movement is attributable to consistently robust growth in lending business, higher efficiency in general insurance business and steady performance in life insurance business.

Near term listing of general insurance companies anticipated at higher valuation warrant an upgrade of Bajaj's general insurance business. Hence, we revise the valuation of general insurance upwards to | 34003 crore, valuing the same at 24x FY20E PAT (earlier 20x FY19E). Going ahead, we remain positive on the stock owing to 1) sustained healthy performance of Bajaj Finance 2) strong growth and improving efficiency in general insurance business and 3) increasing traction in life insurance. Rolling over to FY20E, we revise our TP to | 6000/share (| 5170 earlier) for Bajaj Finserv, implying a multiple of 18.8x on FY20E consolidated earnings. Consequently, we maintain BUY rating on the stock.

Near term listing of general insurance warrants upgrade

The general insurance business remains strong generating RoE in excess of 24%, reporting underwriting profit on ................
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