Bajaj Finance - Omni-Channel Transformation To Drive Market, Profit Share: Motilal Oswal

Motilal Oswal Report

Bajaj Finance Ltd. aims to be an ‘omnipresent’ financial services company, asserting dominance across all consumer touchpoints, covering physical, app-based, web, social and virtual channels.

The company has made significant progress in optimizing its processes and making them digital ready and has made significant structural changes to its technology stack to this effect.

Payments solution offerings will be core to delivering the omni-channel strategy, since it can drive higher engagement and retention of customers on Bajaj Finance’s new digital platforms.

The approach of ‘acquire and cross-sell’ (across payments, loans, deposits, insurance and investments which derives from Bajaj Finance’s experience of an existing customer exhibiting significantly lower credit risk) would be a key growth driver in FY24 as well.

We model an assets under management compound annual growth rate of ~29% over FY23-FY25E for a sustainable return on equity of 25%.

Bajaj Finance’s return ratios have not only been consistent, but are also the highest in our coverage universe (after that of gold financiers).

We reiterate our 'Buy' rating on the stock, with a target price of Rs 8,800 (6.5 times FY25E book per share).

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