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Bajaj Finance share price has gained 40% in five sessions; here's why

Bajaj Finance share has gained 40% in last five sessions hitting intra day high of Rs 2496 today compared to Rs 1,783 on May 27 last week

Aseem Thapliyal Last Updated: June 23, 2020 | 11:53 IST
Bajaj Finance share has gained 40% in five sessions; here's why
Share price of Bajaj Finance has gained 40% in last five sessions hitting intra day high of Rs 2496 today compared to Rs 1,783 on May 27 last week

Bajaj Finance share has logged an astounding recovery from its 52 week low in last five sessions. Stock of Bajaj Finance has gained 40% in last five sessions hitting intra day high of Rs 2496 today compared to Rs 1,783 on May 27 last week. The stock which is the only player from the NFBC sector on Sensex gained 6.39% to Rs 2,496 compared to the previous close of Rs 2,346 on BSE. Bajaj Finance stock opened with a gain of 2.65% at Rs 2,409.  It closed 3.17% higher at Rs 2,421 today.

Of 40% recovery in the stock, Bajaj Finance share logged 28% rise in last three sessions after Modi government allowed offices to open across the country with precautions to contain the spread of coronavirus cases in the country. The resumption of business and industrial activities has infused life into the stock of firm whose loan book comprises mostly of unsecured loans.

The opening of lockdown, which had stalled economic activity across the nation, infused recovery in the stock. Last week, on May 28 and May 29, the share gained from its 52-week low on value buying by investors. The consumer finance firm is a leader in the NBFC sector with a loan book of Rs 1.47 lakh crore for quarter ended March 2020.

On May 27, the stock was down 63% from its all time high of Rs 4,923 hit on February 20, 2020. The market leader available at cheap prices led to value buying in the Bajaj Finance stock last week. On May 19, the firm announced its Q4 earnings which were hit by coronavirus lockdown. It made a contingency provision of Rs 900 crore for Covid 19 in Q4 of last fiscal. The subsidiary of Bajaj Finserv reported a 19.38 per cent year-on-year (YoY) fall in net profit at Rs 948.10 crore for the quarter ended March 31.

Bajaj Finance FY20 results: Profit jumps 32% to Rs 5,264 crore, NII up 42%

Without Covid provision, the firm would have logged over Rs 1,800 crore in net profit in last quarter against Rs 1,176 crore net profit in Q4 of 2018-19. This signals  sound financial position of the  company which had to close operations during the lockdown.  This made the stock look attractive to investors during last five sessions.

Geojit Financial gave a buy call on the stock after Q4  earnings were announced. "Recording strong topline performance in the March quarter we believe that the heavy provisioning will give enough buffer in this challenging environment amidst COVID-19, eventually allowing the company to bounce back, we upgrade our rating to BUY," the brokerage said .

It gave a target price of Rs 2,570 for the stock, an upside of nearly 10 per cent. "Given its strong liquidity position, healthy CRAR, strong geographical presence, growing AUM, positive outlook, and strong parentage, we upgrade to buy rating on the stock with a revised target price," the brokerage said in a report.

Share Market Update: Sensex ends 284 points higher, Nifty at 10,061; Bajaj Finance, Kotak Bank top gainers

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