Share of Bajaj Finance has delivered 166 per cent returns to its shareholders in one year. The share stood at Rs 2,337.15 on June 11, 2020. It has zoomed to Rs 6,228.60 today, translating into gains of 166.5 per cent during the period. In comparison, Sensex rose 56 per cent in one year.
Rs 5 lakh invested in the share a year ago would have turned into Rs 13.32 lakh today.
The stock has gained 16 per cent since the beginning of this year. It opened 0.20 per cent higher at Rs 6,100 against the previous close of Rs 6087.60 on BSE. Market cap of the firm rose to Rs 3.70 lakh crore.
Bajaj Finance share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
Motilal Oswal has maintained 'Buy' rating with a target price of Rs 6,200 per share.
"In the 4QFY21 earnings call, the management guided for achieving long-term growth guidance of 25% assets under management (AUM) growth and 20% ROE - if the impact of the second wave is in line with expectations. However, while the AUM growth now seems like a stretch, ROE of 20% still seems achievable on the back of strong margins and operating efficiencies," the brokerage house said.
"With the high severity of the second wave, some impact on AUM/credit cost was expected. B2B and Auto Financing contribute ~16% to the overall AUM for the company; however, their contribution to overall customer acquisitions is very high. Considering the short duration of the high-volume products, they also contribute meaningfully to fee income for the quarter," it noted.
However, Axis Securities believes the current valuations are expensive and has a 'Sell' rating with a target price of Rs 4,300 per share.
"BAF is focusing on reducing its operating expenses and cost of funds to partially mitigate the financial impact caused by lower AUM growth. We have revised our credit cost estimates upwards by 50bps to 3% and AUM growth downwards by ~2% to ~18% for FY22E," it noted.
"AUM growth will also be impacted by the second wave of Covid-19 on B2B and Auto Finance businesses. While the business transformation process augurs well, there is a very thin margin of error due to expensive valuations and uncertain macro conditions," the brokerage firm added.
HDFC Securities has revised the FY22/FY23 earnings downward by 9.1%/2.0% on account of higher credit costs and downgrade the stock to REDUCE from ADD with a revised target price of Rs 4,832 from Rs 4,928.
In Q4 of the previous fiscal, Bajaj Finance reported a 42 per cent jump in consolidated net profit at Rs 1,347 crore against net profit of Rs 948 crore in the January-March period of the preceding fiscal year 2019-20.
Total income fell by 5 per cent to Rs 6,855 crore in Q4 from Rs 7,231 crore earlier.
For the full year 2020-21, net profit dropped 16 per cent to Rs 4,420 crore as against Rs 5,264 crore in 2019-20. Total income during the year, however, rose 1 per cent to Rs 26,683 crore as against Rs 26,385 crore.
In an investor presentation, the company informed that the existing customers contributed 59% of new loans booked during Q4 FY21 against 68% in Q4 FY20.
This was due to keeping in abeyance wallet loans business (175 K accounts quarterly) and selective lending of Retail EMI (REMI) business (impact of 3 lakh accounts quarterly).
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