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http://content.icicidirect.com/mailimages/ICICIdirect_BajajFinserv_CompanyUpdate.pdf
P l a y o n I n d i a n i n s u r a n c e i n d u s t r y …
Bajaj Finserv is the financial services arm of the Bajaj group generating
annual profit of | 1148 crore, surging 100% YoY in FY11. The standalone
profit came at | 188 crore. Consolidated return ratios also remain strong
with RoA of 2.6% and RoE of 35.1% on an average in spite of the
insurance business being incorporated.
Insurance, both life and general, contributes 90.6% in consolidated
revenues and 76.6% in PBT, being the single major business segment.
Lower general insurance profit impacted the margins of the insurance
segment at 9.3% in FY11. It maintains lower margins mainly due to the
general insurance knock. The standalone life business had 11.3% PBT
margin and 16.6% NBAP margin in FY11. The financing business, on the
contrary, has higher margins contributing 20.5% to profit. It clocked
strong growth in disbursements while maintaining healthy NIMs.
V a l u a t i o n
We have a positive view on Bajaj Finserv on account of the strong brand
equity of the group, stable and experienced management and visible
growth potential in all financial services where it exists. Opportunities for
value unlocking remain as insurance subsidiaries start making profit.
Based on our SOTP valuation, factoring 50% economic interest in the
insurance businesses, we have arrived at a target price of | 772 per share,
thereby assigning a BUY rating to the stock. Valuing at 74% economic
interest, the target price increases by 29% to | 1000 per share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_BajajFinserv_CompanyUpdate.pdf
P l a y o n I n d i a n i n s u r a n c e i n d u s t r y …
Bajaj Finserv is the financial services arm of the Bajaj group generating
annual profit of | 1148 crore, surging 100% YoY in FY11. The standalone
profit came at | 188 crore. Consolidated return ratios also remain strong
with RoA of 2.6% and RoE of 35.1% on an average in spite of the
insurance business being incorporated.
Insurance, both life and general, contributes 90.6% in consolidated
revenues and 76.6% in PBT, being the single major business segment.
Lower general insurance profit impacted the margins of the insurance
segment at 9.3% in FY11. It maintains lower margins mainly due to the
general insurance knock. The standalone life business had 11.3% PBT
margin and 16.6% NBAP margin in FY11. The financing business, on the
contrary, has higher margins contributing 20.5% to profit. It clocked
strong growth in disbursements while maintaining healthy NIMs.
V a l u a t i o n
We have a positive view on Bajaj Finserv on account of the strong brand
equity of the group, stable and experienced management and visible
growth potential in all financial services where it exists. Opportunities for
value unlocking remain as insurance subsidiaries start making profit.
Based on our SOTP valuation, factoring 50% economic interest in the
insurance businesses, we have arrived at a target price of | 772 per share,
thereby assigning a BUY rating to the stock. Valuing at 74% economic
interest, the target price increases by 29% to | 1000 per share
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