Bajaj Finance Rating- hold; Potential to capitalise on credit card opportunity
时间:2024-06-29 02:56:50 阅读(143)
BAF has a shot at being first NBFC to launch credit card, if RBI approves. This would enable Bajaj Finance (BAF) to take product to deeper markets as against the Top-100 towns where it sells cards of RBL Bank/DBS Bank and where majority of players operate. If it achieves 20-40% cross-sell to nondelinquent client base of 40m and even at lower transaction values, it could make `9-17bn in profit in three years. This is 5-10% of FY25E profit & would add growth drivers. Hold stays.
BAF can leverage existing franchise to build on own card biz: If BAF gets approval to foray here, it would be able to leverage its network of +3,500 branches, 140k merchant relationships and 60m customers to ramp-up. Today it procures credit card customers for RBL Bank and DBS Bank with 3m clients right now; these are mostly in top-100 cities . Hence, an in-house credit card programme can expand opportunity set to deeper markets where BAF is already present.
Sizing the opportunity: While BAF is targeting to double loans in three years, approval to roll out credit card will add profitable product to the suite. With 60m customers of which 40m aren’t delinquent, if it can cross-sell cards to 20-40% of non-delinquent users and with 40% lower transaction value & loan/ card, it could do `170-350bn in loans. At 5% ROA, it could drive `9-17bn in profit which would be 5-10% of our FY25 estimate and could be a long-term growth driver for BAF.
Also read: Bajaj Finance rating: Sell | Macro headwinds to impact growth
Growth to support valuation premiums: BAF continues to deliver stronger than peer-group growth as well as profitability. Moreover, even if there is some moderation in NIMs due to rise in funding costs, it could get compensated by potential for operating efficiencies. These would support its premium valuations. We raise earnings marginally & see 28% CAGR in profit over FY23-25 (FY23 should grow fast on low base) and maintain our Hold rating with PT of `8,000 (earlier `7300) based on 7.2x Jun-24E adjusted price-to-book (PB) ratio.
上一篇:Sebi mulling framework for issuance of subordinate units by REITs, InvITs to sponsors
下一篇:Year-Ender 2023- AI applications to look out for, now and beyond
猜你喜欢
- AI, Hyper Personalization to Change Wealth Management in India- 5 Trends That Will Drive Wealth Advice in 2023
- Blue Nudge introduces environmental education programmes by integrating AR and VR
- BJP MP Pratap Simha’s brother arrested in tree felling case, alleges ‘conspiracy’
- After uptrend, Nifty witnessing range-bound activity; buy TechM, BPCL, others to pocket short-term gains
- Bharat Dynamics share price soars 7
- SBI raises Rs 10,000 cr through infra bond sale
- SBI Clerk Prelims Exam 2024- Test for over 8,000 junior associate positions begins today – Check guidelines, shift timings and more
- Bills replacing British-era criminal laws get President’s assent, become law
- Apollo Tyres, Bharti Airtel among 130 BSE stocks to hit 52-week highs, 18 fall to 52-week lows