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Sensex surged 809 points to 81,765.86, and Nifty climbed 240.95 points to 24,708.40, marking a seven-week high ahead of the RBI policy. IT and bank stocks led the rally, with Infosys and TCS each gaining over 3%. The broader market also thrived, with 2,144 stocks advancing.
RBL Bank has ended its co-branded credit card partnership with Bajaj Finance due to changing product synergies, with BFL now contributing significantly less to new card sourcing. This decision, while unexpected, is seen as a prudent risk management move amid challenges in the bank's unsecured lending segment. Consequently, ICICI Securities has downgraded the stock to HOLD with a revised target price of INR 160, reflecting a cautious outlook on growth and return on assets.
ICICI Securities has maintained a BUY rating for Bajaj Finance, setting a target price of Rs 8,500. The company has ended its eight-year co-branded credit card partnership with RBL, citing a strategy to diversify fee income and reduce reliance on credit card fees, with minimal impact on profitability expected.
RBL Bank and Bajaj Finance Limited have decided to halt the issuance of new co-branded credit cards, with existing cards remaining operational and transitioning to RBK branding upon renewal. The bank plans to diversify partnerships to reduce reliance on any single entity while maintaining its focus on the credit card business. Growth and margin estimates have been moderated, leading to a 5% and 15% cut in FY25/26E PAT estimates, with a revised target price of INR 170.
Bajaj Finance has decided to exit the co-branded credit card distribution business, terminating its partnership with RBL Bank and potentially with DBS Bank as well. This move comes despite previous ambitions to become a leading card issuer, as the company currently holds around 4 million co-branded credit cards. While valuations appear attractive, significant upside is unlikely until Bajaj Finance addresses asset quality challenges in its B2C loan book and increases the proportion of secured loans. The target price is set at INR 7,250.
Investec has downgraded its target for RBL Bank to ₹170, citing a termination of its co-branding card arrangement with Bajaj Finance, which may lead to a moderation in credit growth. Meanwhile, Nomura maintains a buy call on Dixon Tech with a target of ₹18,654 per share, highlighting the company's potential in premium smartphone production. Nuvama also recommends a buy on Adani Ports, setting a target of ₹1,960 per share, driven by logistics advancements and strong volume guidance.
Jigar Patel anticipates Nifty's rise towards 24,500, highlighting Bajaj Finance, Reliance, and Havells India as key stock picks amid a market recovery. The Nifty index rebounded to 23,900, supported by technical indicators, while the Nifty Bank index showed resilience, suggesting potential further gains. Traders are advised to buy Nifty Futures between 23,800-23,750 and Bank Nifty between 51,000-50,900, with specific stop-loss and target levels.
On November 22, the BSE Sensex surged by 1,599 points (2.1%) to reach 78,754, while the NSE Nifty rose by 478 points to 23,828, driven by a rally in financial stocks and strong US labor market data. Market breadth was positive, with 2,123 shares gaining and 1,218 declining. Key gainers included Reliance Industries, ICICI Bank, and Tata Motors, while the Nifty PSU Bank index rebounded by 2.47% after a previous decline.
Unsecured loans are showing increasing slippages, raising concerns for Indian lenders. Yes Bank reported that 35-40% of its fresh slippages in the second quarter stemmed from this portfolio, with a total of Rs 1,179 crore in retail slippages. Similarly, Bajaj Finance is tightening its underwriting norms in response to the trend.
Bajaj Finance reported a 13% YoY growth in PAT for 2QFY25, reaching approximately INR 40.1 billion, with NII increasing by 23% YoY to around INR 88.4 billion. Despite a healthy PAT CAGR of ~24% projected through FY27E, the stock is rated Neutral with a target price of INR 7,320, reflecting limited upside catalysts.
Bajaj Finance Limited
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