Bajaj Finance, a well-known Indian non-banking financial company, recently saw its share price hit a 52-week high after reporting its September quarter business updates. The stock opened at ₹8012.05 and rose by 0.9%, reaching a new high of ₹8,040.55. However, the gains were short-lived, and the stock traded flat by 9:30 am.
In the current year, Bajaj Finance’s share price has gained over 21%, outperforming the equity benchmark Sensex, which has gained nearly 8% in the same period.
Bajaj Finance’s business update for the second quarter showcased significant growth in key areas. The company reported a 26% increase in new loans booked during Q2FY24, reaching 85.3 lakh compared to 67.6 lakh in Q2FY23. Additionally, the company’s assets under management (AUM) grew by 33% to approximately ₹2,90,200 crore, and its deposits book increased by 39% to ₹54,800 crore. Bajaj Finance also highlighted a strong liquidity position with a consolidated net liquidity surplus of ₹11,400 crore. Furthermore, the company’s customer franchise expanded from 6.29 crore to 7.66 crore.
Several global brokerage firms expressed positive sentiment towards Bajaj Finance. Jefferies maintained a buy call on the stock with a target price of ₹8,830, citing the robust AUM growth in Q2FY24. Morgan Stanley also maintained an overweight rating with a target price of ₹10,300, expecting a 33-35% AUM growth in FY24. However, Citi maintained a neutral view with a target price of ₹7,800, emphasizing the potential repricing of borrowing at a higher cost of funds.
Axis Securities, another brokerage firm, has a buy call on Bajaj Finance stock with a target price of ₹8,590. They expect the company to achieve nearly 28% CAGR AUM growth over FY23-25E. Axis Securities also highlighted Bajaj Finance’s investment in technology and the gradual improvement of its cost ratios over FY24.
Although Bajaj Finance has a healthy tier-I capital of about 23%, the recent fundraising announcement suggests the company’s long-term growth ambitions. After the fundraising, Bajaj Finance is expected to maintain a robust return on equity (RoE) of more than 21% over the medium term.
In conclusion, Bajaj Finance’s strong quarterly performance and positive outlook from brokerage firms have contributed to its share price reaching a new 52-week high. With its significant AUM growth and solid liquidity position, the company appears well-positioned to continue its growth trajectory in the coming months. Investors should consult certified experts before making any investment decisions.