Bajaj Finance, SBI Life, SRF, Phoenix Mills, Indian Bank, Cyient, Syrma & More Q1 Review — HDFC Securities

The brokerage maintains 'Buy' call on Bajaj Finance, SBI Life, Indian Bank, Phoenix Mills, 'Add' for Canara Bank, SRF, Supreme Industries, Karus Vysya, Cyient among others - Check target prices.

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HDFC Securities Institutional Equities

Bajaj Finance - In-line P&L outcome; macro stress testing asset quality

Bajaj Finance Ltd.’s Q1 FY26 earnings were largely in line with our estimates, with robust AUM growth (+24.6% YoY) and improving operating efficiency, offset by lower other income and high credit costs. Credit costs was marginally higher—2.02% vs 1.97% (adjusted) in Q4 FY25—as the management indicated stress in the MSME portfolio (~12% of AUM) due to broader macroeconomic slowdown.

Bajaj Finance’s post-pandemic cross-functional investments are gradually reflecting in increasing throughput and higher efficiency gains (C/I at 33%; opex-to-AUM at 3.8%), which are likely to sustain over FY26E-FY27E. Bajaj Finance is poised for ~24% AUM CAGR over FY26-FY27E, with the scale-up of new products, while also simultaneously delivering strong profitability.

Mr. Rajeev Jain would continue to remain Vice Chairman and MD until Mar-28, with succession more likely toward the end of his tenure. We maintain Buy with a RI-based target price of Rs 985 (implied 4.4x Mar-27 ABVPS; 23x FY27 EPS).

SRF - Chemicals and packaging film drive revenue

We retain Add on SRF Ltd., with a target price of Rs 3,291, on the back of-

1. strong demand outlook for refrigerants in domestic and export markets,

2. healthy traction in newlylaunched products and demand pick-up for key agrochemical intermediates in specialty chemical business, and

3. healthy margin in domestic market in Packaging Film Business owing to supply shortage.

Ebitda/APAT were 16/15% below our estimates, owing to lower-than-estimated revenue and higher-than-expected employee and power fuel costs.

Karur Vysya Bank - Searching for levers to protect best-in-class return ratios

Karur Vysya Bank Ltd.’s earnings were in line with estimates on the back of healthy operating performance, supported by strong fee income traction and stable margins. Healthy loan growth (~16% YoY) was driven by retail, agri, and MSME segments, while the corporate portfolio continued to degrow, given the bank’s strategy to shed margin-dilutive businesses (corporate loans).

Deposit growth hugged loan growth (+16%+ YoY) as the CASA ratio clocked in at 27.5% (+21bps QoQ). We tweak our FY26E/FY27E estimates, factoring in a 18bps NIM compression (earlier: 15bps) and softer credit costs for FY26E (70bps).

We remain constructive on Karur, given its consistent operational performance, a granular portfolio, and strong asset quality outcomes.

We maintain Add with a revised target price of Rs 290 (1.7x Mar-27 adjusted book value per share).

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