On Thursday, Kotak analysts reinstated coverage on Bajaj Finserv Ltd (BJFIN:IN), issuing a Buy rating and setting a price target of ₹1,930.00. The recommendation reflects a positive outlook for the company, which is engaged in a variety of financial services in India, including insurance, lending, and asset management.
The analysts based their valuation on several key components of Bajaj Finserv's business. Bajaj Finance (NS:BJFN), a subsidiary of Bajaj Finserv, was given a Fair Value (FV) of ₹8,000 and received an Add rating by the analysts. The insurance arms of the company, Bajaj Allianz (ETR:ALVG) Life and Bajaj Allianz General, were valued at 2 times and 3.6 times their respective metrics. For Bajaj Allianz Life, this valuation falls within the 2.0 to 2.6 times Enterprise Value (EV) range that is typical for listed private sector peers.
The analysts also factored in a 10% holding company discount in their valuation. Bajaj Finance's loan book for the financial year 2024, with 39% categorized as unsecured, positions the company to benefit from the asset quality cycle. The firm's historical performance is noted as superior over the years, which adds to the analysts' positive outlook.
Additionally, Bajaj Finserv's insurance subsidiaries are seen as defensive plays that provide a balance to the holding company's risk profile. The analysts believe that new business ventures in health, distribution, and asset management will contribute to the company's value over time.
The reinstatement of coverage by Kotak comes with a strong endorsement of Bajaj Finserv's financial products and services. The company's diverse portfolio and strategic position in the financial market support the analysts' optimistic perspective on its stock potential.
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