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In 1Q24, Bajaj Finserv reported consol PAT of INR 19.5bn led by strong performance in Bajaj Finance (+32% YoY PAT) while insurance subsidiaries BAGIC and BALIC also reported healthy growth and profitability. BAGIC delivered profit of INR 4.15bn, flat YoY attributable to lower realized gains and impairment provision of unlisted equity of INR 100mn offset by higher current income and lower COR. BAGIC has shown a revival in GWP growth to 22% YoY vs 16.5% for the industry driven by revival in motor segment growth (+26% YoY) and continued momentum in group health and commercial lines (+43% and +22% YoY resp). COR improved 390bps YoY to 100.7% as loss ratio declined to 74.3% vs 77.9% YoY with the decrease attributable to lower claims in motor and commercial lines. BALIC continued outperforming the industry with indvl APE growth of 15% YoY vs 2% for the industry and 8% for private peers driven by strong growth in ULIP and protection segment (+27% and +91% YoY resp.) while par savings and annuity (-21% and -23% YoY resp.) segment witnessed a degrowth. However, net NBV was down to INR 0.94bn (down 30% YoY) with margins of 7.4% (vs 11.1% in 1QFY23); decline was mainly due to change in product mix and interest rate movement. Bajaj Finance (BAF) continued its strong all round performance with strong growth momentum, healthy NIM profile and strong profitability. Management remains confident to sustain its growth trajectory in FY24 while continuing to sound caution w.r.t unsecured lending as a space. BAF has raised its long-term RoA guidance to 4.6-4.8% (from 4-4.5% earlier) and RoE guidance to 21-23% (from 19-21% earlier). 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-inclass 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 1,840.

* BAGIC– revival in GWP growth momentum: In 1QFY24, GWP increased 22% YoY vs 16.5% for the industry driven by revival in motor segment growth (+26% YoY) and continued momentum in group health and commercial lines (+43% and +22% YoY resp). Overall motor segment growth was driven by strong growth in 2W and 4W (+40% and +28% YoY resp) while CV growth was moderate at 15% YoY. The product mix shifted in favour of group health (+2pps YoY to 16%) and motor segment (+1pps YoY to 35%). Channel mix moved in favour of individual agents (share of GWP up 2pps YoY to 18%) with a corresponding decline in direct share; share banks and brokers was stable at 10% and 45% resp. Underwriting loss was at INR 420mn vs loss of INR 610mn in 1QFY23. COR improved 390bps YoY to 100.7% as loss ratio declined to 74.3% vs 77.9% YoY with the decrease attributable to lower claims in motor and commercial lines. PAT for 1QFY24 was at INR 4.15bn (+1% YoY) aided by stable investment performance. Solvency ratio remained robust at 388%.

* BALIC – APE growth driven by high ticket non-par savings segment: In 1QFY24, BALIC continued outperforming the industry with indvl APE growth of 15% YoY vs 2% for the industry and 8% for private peers driven by strong growth in ULIP and protection

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