Jefferies Upgrade Bajaj Finance from Hold to Buy with TP of 7,280 +24%.
The main thesis:
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Although AUM has softened it is likely to remain above 25%
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BAF is planning to get into newer markets like CV financing, car loans, microlending. In addition, opening up of the credit card business can account for 5-10% of profits in the next 2-3 yrs.
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AUM is expected to double from 2trn to 4trn in the next 3 yrs as per management.
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As rate cycle peaks, pressure on NIMs are likely to reduce.
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Two catalysts: peaking of interest rate cycle and RBI allowing its credit card foray.
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Risks: Increased competition from newer players like Jio Finance.
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