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Macquarie on Bajaj Fin
U-P, TP Rs 5275
Weakening cross-sell franchise & co's weaker digital footprint will affect loan growth going ahead
Expect RoA to moderate from 4.6% in FY23E to 4.2% over FY23-25E, while consensus builds no moderation
Risk-reward unfavourable @6.4x FY24E BV
Bajaj Finance has lost a bit of ground. The 6800 Put came into the money. However, instead of delivering the stock, I rolled it down to the 6600PE. Hopefully the stock will stay above that till the Nov expiry.

I didn't want to give delivery as the stock is worth keeping and there would be a liability for capital gains tax in case I delivered it. So, I covered the position and absorbed the loss. I have sold Calls and Puts and hope to recover the loss in the next few months.

I have sold 6000 2540CE Calls in HDFC Ltd for Rs 16.55 each. Today, the stock surged nearly 6% to Rs 2650. This was because the DOW had surged 900 points (3%) yesterday because inflation is falling. Also, news came in that under the amended MSCI M&A RULES, HDFC, HDFC BANK Merged entity can see double the current MSCI weight. MSCI Weight post merger can go from 5.78% to 13%. Adjustment factor of 1x applicable instead of 0.5x.

The result is that I am bleeding profusely from the short calls.

I have the stock in my portfolio and will give delivery in case adjustment is not feasible.

Bajaj Finance has yielded a good gain of about Rs. 3.50 Lakh due to the stock staying range-bound. I will repeat the same process for November. This will hopefully enable me to recover some of the losses suffered due to the premature sale.

Though the stock is at 519, the 540PE is yielding a gain of Rs. 10800. In addition, the 550CE is also yielding a nice gain. So, I exited the positions for a gain of Rs 45500. I have placed an order for sale of two lots (1950) of the 500PE of the November expiry for Rs 14.

Jefferies has recommended a buy of Can Fin Homes for a target price of Rs 635

"Jefferies On Can Fin
Buy, TP cut to Rs 635
Operating Results Beat; Clarity Around Mgmt Transition Key To Re-Rating
Strong Demand In Housing Should Drive 20% Loan CAGR Over FY22-25
NIM Ahead Of Est But Could Dip Over FY22-25
Raise FY23-25 EPS Est. By 9-10%"
Can Fin jumped nearly 4% putting my overall position in a tidy profit. If the Calls get threatened, I will exit at cost.

The strategy of selling Calls helped to neutralize the loss on the Puts. If the stock closes below Rs 540 by expiry, I will take delivery and selling Rs 540 Calls of November.

Atul Auto is up 7% today over this news of Vijay Kedia's investment.