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In 4Q23, Bajaj Finserv reported consol PAT of INR17.7bn for 4QFY23 led by strong performance in Bajaj Finance (+31% YoY PAT) as well as BALIC (VNB growth of 35% YoY). BAGIC delivered profit of INR 3.2bn, up by 30% YoY as the combined ratio improved sequentially (at 97.3%, -100bps YoY) and better investment gains during the quarter. BAGIC’s growth was a tad slower than the industry driven by moderate growth in motor segment, while other segments continue their growth momentum - retail and group health (+16.4% and 29.8% YoY resp), commercial lines (+15% YoY), travel (+54.5% YoY). BALIC delivered continued growth outperforming the industry with indvl APE growth of 48% YoY vs 24% for the industry and 35% for private peers driven by strong growth in non-par savings segment (aided by impending tax rule changes). NBV increased to INR4.15bn (up 35% YoY). However, margins were down to 18.6% (vs 19.4% in 4Q22) given the higher ticket non-par savings come in at slightly lower margins. Bajaj Finance reported a nearperfect quarter with strong growth momentum, healthy NIM profile and strong profitability. Management remains confident of sustaining its growth momentum ahead and indicated benign credit environment is likely to aid profitability in FY24E as well. We believe BJFN’s current valuations offer an attractive entry point for investors to play next leg of growth in Bajaj Finance, continued improvement momentum in life insurance and a best-in-class general insurance business which is currently at a cyclical trough with respect to earnings growth. We maintain BUY with a revised target price of INR 1,575.

* BAGIC– improvement in COR driven by lower loss ratios: In 4QFY23, GWP increased 14% YoY vs 16.2% for the industry driven by retail and group health (+16.4% and 29.8% YoY resp), commercial lines (+15% YoY), travel (+54.5% YoY) while motor growth was moderate (though improving) at 13.3% YoY – 2W and 4W growth was strong at 26% YoY and 18% YoY resp. while CV growth was lower at 1% YoY as the focus on 2W is on a rise while that for CV is down (given overcrowding in the market). The product mix shifted in favour of group health (+2pps YoY to 12% share) while share of others declined. Share of motor, retail health and commercial lines was stable YoY of at 42%, 7% and 19% resp. Channel mix moved in favour of brokers (share of GWP up 15pps YoY to 62%) with a corresponding decline in direct share. Underwriting loss was at INR 20mn vs profit of INR 90mn in 4QFY22. COR improved 100bps YoY to 97.3% as loss ratio declined to 66.4% vs 68.8% in 4QFY22. PAT for 4QFY23 was at INR 3.2bn (+30% YoY) aided by better investment performance. Solvency ratio remained robust at 391%, up from 344% last year.

* BALIC – APE growth driven by high ticket non-par savings segment: In 4QFY23, BALIC continued outperforming the industry with indvl APE growth of 48% YoY vs 24% for the industry and 35% for private peers driven by strong growth in non-par savings segment (aided by impending tax rule changes). With this strong growth, BALIC’s market share among private players has improved to 7.6% in FY23 vs 6.7% in FY22. On premium mix, non par savings individual rated premium reported a strong growth of 133% YoY leading

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