Why Bajaj Finance Stock Price Is Shooting Through The Roof

Bajaj Finance delivered an all-round healthy performance in all its key business parameters. Institutional brokerage houses are impressed with the superlative number by the company and raised the price target to Rs.9,000 and above.
Bajaj Finance Share Rise
Bajaj Finance Share Rise

Bajaj Finance a leading non-banking financial corporation (NBFC) reported 85 per cent year-on-year growth in consolidated net profit at Rs 2,125.29 crore for the quarter ended December. Net profit stood at Rs 1,145.98 crore in the year-ago period.

The company got a major boost in terms of loan disbursement in this quarter as loans booked in the quarter rose to 7.35 million, witnessing a growth of 23 per cent year-on-year. In terms of the NBFC, especially for housing finance companies, Bajaj Finance has assigned a total count of 1700 loans and assigned more than Rs 290 crore loans for the same. In this quarter, the company received more than three thousand requests for loans from individual borrowers both in terms of personal loans and business loans and also for small business loans.

There has been a considerable rise in the net interest income (NII) with a rise of 40 per cent at Rs 6,000 crore in the latest December quarter. It was at Rs 4,296 crore in the same period a year ago.

The consolidated assets under management were also up by 26 per cent to Rs 1,81,250 crore during this quarter that ended December 2021. In the year-ago period, the same stood at Rs 1,43,550 crore.

Back on this impressive number Motilal Oswal Securities writes in its report “3QFY22 was a strong quarter for BAF with an all-round momentum across key business parameters. Customer acquisitions and new loans booked have reached pre-COVID levels and will soon breach historical highs in subsequent quarters”.

Despite covid led disruption, the company has substantially improved its assets quality. The company posted gross non-performing assets (NPA) and Net NPA as of December 31, 2021, at 1.73 per cent and 0.78 per cent, respectively, as against 2.45 per cent and 1.10 per cent (respectively) as of September 31 2021. “Given the expected strength in asset quality in 2HFY22 and the sustained milestones-driven progress made by it in its digital transformation program, we reiterate our Buy rating with a TP of INR9,080 (8.5x FY24E BVPS)” writes Motilal Oswal Securities in its report.

Morgan Stanley a global investment firm in its report cites that valuation of the stock is not cheap but considering the earning momentum, the firm has revised its target price by around 17 per cent to Rs. 9,080 per share. “Valuation is not cheap – but business and earnings momentum with improving economy and Bajaj Finance's technological initiatives imply that the stock will keep doing well” reads report.

According to JM Financial-an institutional securities firm, digital Initiatives by the company is shaping up well. It says in its report “Digital initiatives are shaping up well

with a clear guided path over next 2-3 quarters. Furthermore, management. has been augmenting expenditure to ramp-up digital infrastructure without diluting the profitability of the franchise. We remain constructive on Bajaj Finance given acceleration in revenue momentum, levers to increase efficiencies further and digital rollout driving next leg of growth. We believe the company is well placed to deliver superior profitability with profit after tax (PAT) CAGR of 45% over FY21-23E, translating into ROA / ROEs of 4.5% / 23% in FY24E. We maintain BUY with unchanged TP of INR 9,000.

Other broking firms such as ICICI Securities, Nirmal Bang, and many others have also given the price target in the range of Rs8500-9000.

Back on all these positives, Shares of Bajaj Finance on Wednesday jumped nearly 4 per cent on a day after the company reported its quarterly numbers.

Today, the stock spiked by 3.82 per cent at the BSE and at the NSE, it jumped 3.88 per cent, recording its 52-week high of Rs 8,043.50 on both the BSE and NSE. Even on Tuesday, the company's share price on BSE closed at 1.3 per cent lower at Rs 7,747. But it witnessed a spike the day after.

Outlook Money in November 2013 issue has recommended this stock to its reader at Rs.255 a piece (considering the stock split of year 2016 from its face value of Rs. 10 to Rs.2).

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