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HDFC Securities Institutional Equities

Bajaj FinServ - Consistently delivering

Bajaj Finserv Ltd.'s 9M FY26 performance was strong across all operating businesses. Bajaj Allianz General Insurance Company reported 10% YoY gross direct premium income growth, with profitability slightly ahead of estimates on the back of higher realized capital gains and favourable target price loss ratio.

Bajaj Allianz Life Insurance Company continued to showcase benefits of strategic shifts undertaken, with 52% VNB growth and a 540 basis points margin improvement, despite 2% decline in annual premium equivalent.

Bajaj Finance delivered adjusted AUM growth (+22% YoY) though PAT declined by 6% YoY due to accelerated provisioning of Rs 1,400 crore (0.3% of gross advances), given the implementation of minimum LGD floor across businesses.

With the NBFC business maintaining sector leadership, the improving trajectory in insurance is expected to drive an operational turnaround and a 500 bps increase in SOTP contribution, supporting a re-rating.

The brokerage maintains Buy with the SOTP-based target price of Rs 2,510 (78% currently contributed by the flagship NBFC business).

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