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Bajaj Finance – Unveils strategy 3.0; asset quality trend to impact valuation in near term

ICICIdirect Research 13 Dec 2024 DISCLAIMER

Bajaj Finance has unveiled business strategy 3.0 for FY24-29E wherein the lender aims to 1) increase credit market share from 2.1% to 3-3.25% in FY28E and 3.2-3.5% in FY29E, 2) focus on customer acquisition from current ~9.2 crore to 13-14 crore by FY28E and 19-20 crore by FY29E. 3) increase cross sell customers from current 57.7 lakhs to 80-90 lakhs by FY28E and 1.15-1.25 crore by FY29E.

Target to maintain RoE at 20-22% level in FY28-29E (currently at ~19.4%) led by robust customer acquisition, increase in ticket size and cost optimization by utilising AI (annual cost saving of ₹150 crore expected). Segments including personal loans, MFI, 2-wheeler and MSME loans are expected to aid AUM growth.

Strategic plan to sustain strong loan growth with profitability induces confidence. However, near term challenges with respect to margins and asset quality is expected to keep valuation volatile.

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