Bajaj Finance, Ambuja Cement, Trent, Oberoi Realty, IndiaMart Q4 Results Review: HDFC Securities

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HDFC Securities Institutional Equities

Bajaj Finance - Best-in-class franchise hits asset quality bump

Bajaj Finance Ltd.’s Q4 FY25 earnings missed our estimates on account of elevated credit costs (2.3% annualised), despite steady AUM growth (+26% YoY) and improving operating efficiency. A challenging macro continued to take a toll on asset quality as credit costs trended north of management guidance (2.1% for FY25) even as the management guided for marginal moderation in FY26 credit costs to ~1.9%. Bajaj Finance’s post-pandemic cross-functional investments are gradually reflecting in higher throughput and efficiency gains (C/I at 33%; opex-to-AUM at 3.9%), which are likely to sustain over FY26E-FY27E.

Bajaj Finance is poised for ~24% AUM CAGR over FY26-FY27E, with the addition of new products, while also simultaneously delivering strong profitability. We trim our FY26E/FY27E estimates marginally to factor in higher credit costs and lower fees, which is likely to be offset by efficiency gains. We maintain Buy with a revised RI-based target price of Rs 9,510 (implied 4.3x Mar-27 ABVPS; 24x FY27 EPS

Ambuja Cement - Cost normalisation drives margin recovery

We maintain Add with a target price of Rs 570/share (16.5x its consolidated Mar-27E Ebitda). In Q4 FY25, consolidated volume rose 13% YoY on healthy organic growth of 7% and ramp-up of Sanghi and Penna assets. Price recovery, lower input costs and normalisation of other expenses drove margin expansion by Rs 461/mt QoQ to Rs 999/MT.

Management remained confident of reducing opex to ~Rs 3,650/MT by FY28 (aggressive guidance in our view) along with achieving 140mn MT capacity by the end of FY28.

Trent - Margin surprises positively

Trent Ltd. continues to sport the best growth profile amongst apparel peers; albeit the pace of growth is moderating. Standalone revenue grew 28.8% YoY to Rs 41.06 billion (our estimate: Rs 40.84 billion), primarily driven by Zudio. Fashion formats clocked mid-single digit same-stores sales growth in Q4 (double-digit SSSG in FY25).

Its grocery format Star grew 17% YoY (SSSG: 2%). Despite the rising Zudio skew in sales, the company managed to improve Ebitdam YoY (101bps expansion YoY; 16% versus our estimate’s 15%). It is strategically increasing its store density in key markets. The retailer added 10/130 (net) stores in Westside and Zudio respectively. We largely maintain our FY26/27 estimates and retain Sell with an SOTP-based target price of Rs 4,200 (incl. 61x FY27 P/E for the standalone business).

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