Bajaj Finance has a shot at being the first NBFC to launch a credit card, if the RBI gives the nod, according to global brokerage Jefferies, which allows BAF to market the product to deeper markets as compared to the top-100 cities selling cards of RBL Bank/DBS. will be able to carry. Bank and where most players work.
“If it achieves 20-40% cross-sell to a non-criminal customer base of 40 million and even at low transaction values, it can 9-17 billion profit in 3 years This is 5-10% of FY25E profit and will add to the growth drivers,” said Jefferies while maintaining hold rating Shares of Bajaj Finance with a price target of 8000 per (earlier.) 7300).
There are 80 million credit cards in India and the reach is very low compared to the larger markets. If Bajaj Finance gets the nod to enter here, it will be able to ramp-up its network of +3,500 branches, 140k merchant relationships and 60 million customers, it added.
“Today it handles purchasing credit card customers for RBL Bank and DBS Bank with 3 million customers; These are mostly in the top-100 cities limited by a network of banks for underwriting, service and collection. Therefore, an in-house credit card program can expand opportunities in deeper markets where BAF is already present.”
While BAF is aiming to double the loan in 3 years, the approval to roll out the credit card will add profitable product to the suit. With 60 million customers, of whom 40 million are not criminals, if it can cross-sell cards to 20-40% of non-criminal users and with 40% lower transaction value and loans/cards, it can Is 170-350 billion debt according to the brokerage house.
“BAF continues to deliver strong compared to peer-group growth as well as profitability. Further, even if there is some reduction in NIM due to increase in funding cost, it can potentially be compensated for operational efficiencies. This will support its premium valuation. We see marginal growth in earnings and 28% CAGR in profit in FY23-25 (FY23 should grow faster on a lower basis),” the note added.
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