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MOSL: Morning India (15/January/19): 1. Bajaj; 2. Fund Folio (Indian Mutual Fund Tracker); 3. Financials (RBI’s Prompt Correct Action Framework: Emerging ray of hope!); 4. EcoScope; 5. Metals Weekly

MOrning India (15/January/19): 1. Bajaj Finance (Hitting the pedal on asset-light profitability); 2. Fund Folio (Indian Mutual Fund Tracker); 3. Financials (RBI’s Prompt Correct Action Framework: Emerging ray of hope!); 4. EcoScope; 5. Metals Weekly

 

Today’s top research idea

Bajaj Finance: Hitting the pedal on asset-light profitability; Key vectors - rural, cross-sell and retailization of liabilities

• We are optimistic on Bajaj Finance's (BAF) outlook given traction in multiple products, new initiatives in various business segments (on the asset side as well as liability side) and top management leadership. In particular, we are enthused about new emerging vectors of profitability which will be asset-light, with increased focus on operating efficiency, granular retail portfolio and capital efficiency.
• Technology remains a bedrock of the enterprise in risk management. In our view, BAF is structurally moving toward a retail banking structure with a growing deposit franchise, rising penetration in hinterlands, credit and fee-based product offerings, and management depth to handle bank structure responsibilities.
• While we are excited about business, at a P/B of 5.9x FY20E, valuations, appear rich. We, thus, maintain our Neutral rating with a target price of INR2,375 (5x Dec'20E BVPS).

Piping hot news

CPI inflation falls to 18-month low; declines to 2.19% in December

• Consumer Price Index (CPI) inflation in December dropped to 18-month low of 2.19 per cent versus 2.33 per cent in November amid sliding prices of fruits, vegetables and fuel, according to official data released Monday.