The Bajaj Finance stock has created enormous wealth for its investors during the last three years. The non-banking finance company (NBFC) is engaged in the business of providing loans for two-wheelers, consumer durables, personal computers, personal loans, and insurance services.
The Rahul Bajaj-led firm has seen a steady growth in its financial performance during the last three years which has propelled its stock price to over five times during the same period.
On August 27, 2015, its stock price stood at 509 level. Currently, it is trading at 2,950 level.
An investment of Rs 1 lakh into the stock three years ago would have turned into Rs 5,79,567 corpus in the current scenario.
The rise in stock price can be attributed to a host of factors such as consistent rise in net profit, interest income, loan book and sales.
Net sales of the firm rose more than 100% during the last three years. For FY 16, sales stood at Rs 6,901.19 crore which rose to Rs 13,442.04 crore for the fiscal year ended March 2018. Sales figure for FY 17 stood at Rs 9,966.71 crore.
Interest expenses rose from Rs 2,926.85 crore for the fiscal ending March 2016 to Rs 4,634.33 crore for the fiscal ending March 2018.
Net interest income stood at Rs 8,831 crore for the fiscal ending March 2018 compared to Rs 4457 crore for the fiscal ending March 2016, clocking a rise of 98.13%. Net interest income for FY 2017 stood at Rs 6,188 crore.
Net profit of the firm rose from Rs 1,278.63 crore for the fiscal ended March 2016 to Rs 2,674.11 crore for the fiscal ended March 2018.
Mustafa Nadeem, CEO at Epic Research said, "The stock, without a doubt, is in a category that would be labelled as a multibagger. Firstly, it is the increase in consumer lending and the kind of presence this company has made it a leader in the space. The consumer lending space has been promising in the last couple of years as its index has seen a sharp jump from 1600 to 2500 levels while on the other hand, the company has posted a growth of 50% CAGR in last 4 years. The EBITDA margins have seen a growth that has been above 50% and this is something an intrinsic character of a stock that is a must in the portfolio. Price action suggests there is no stopping in near term with higher targets. Since it's a price action that is in uncharted territory, we suggest using any dip in the stock of more than 15-20%."
The stock has contributed significanlty to the rise in Sensex and Nifty this year. According to a report by Equinomics on August 23, 2018, only top five companies -TCS, RIL, Hindustan Unilever (HUL), Bajaj Finance and HDFC Bank - have collectively contributed Rs 5.58 lakh crore to the market cap (m-cap) rise since January 23 levels.
The large cap stock has gained 61.71% during the last one year and 68.09% since the beginning of this year.
Bajaj Finance went public in the year 1994 and is listed on Bombay Stock Exchange and National Stock Exchange.
Headquartered at Pune, the company has a pan-India presence through 50 branches that includes Hyderabad, New Delhi, Chennai, Bangalore, Mumbai, Nagpur, Vijaywada, Nasik, Vishakhapattanam, Kolkata, Goa, Madurai and Pune.