Bajaj Finserv Q1 Results Review - Life Insurance Business Sluggish; Health Insurance Drives Growth: DRChoksey

DRChoksey Research Report

Bajaj Finserv Ltd. reported a mixed performance in Q1 FY25, with moderate growth in the lending and life insurance segment, while general insurance saw healthy growth. The slight moderation in lending business was due to the ban for the initial period of the quarter, while for the life insurance, the sluggishness was due to seasonal weakness.

The other businesses, such as Bajaj Direct and AMC, continued to ramp up in line with the company's strategy. Bajaj Finserv remains steadfast in its commitment to bolstering  Bajaj Allianz General Insurance's market presence in targeted segments through an expanded product portfolio and widened distribution channels.

Bajaj Allianz Life Insurance Company continues to focus on strengthening its agency and direct channels through investments in personnel and process optimization and forging new bancassurance tie-ups.

We are confident that Bajaj Finserv and its subsidiaries will continue to pursue a comprehensive business model that will position them to capitalize on long-term opportunities in the financial services and solutions industry.

On a consolidated basis, we have factored in a revenue compound annual growth rate of 17.4%over FY24-26E and a net profit CAGR of 28.2% over the same period.

We have used the SoTP approach to arrive at a target of Rs 1,935 per share (earlier Rs 1,880); (2.5 times price/enterprise value for Bajaj Allianz Life Insurance on FY26E EVPS; 3.2 times P/B for Bajaj Allianz General Insurance on FY26E; and 4.5x P/ABV on FY26E for BAF); indicating an upside potential of 18.4% over CMP. Accordingly, we maintain our “Buy” rating on the shares of Bajaj Finserv.

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