Bajaj Finance share price rose almost by a per cent to hit its fresh 52-week high of ₹8,040.55 in early trade on BSE on Wednesday (October 4) a day after the company reported its September quarter business updates. The stock opened at ₹8012.05 against the previous close of ₹7968.95 and rose by 0.9 per cent to its 52-week high. However, the stock erased gains quickly and traded flat around 9:30 am.
In the current calendar year so far, Bajaj Finance share price has gained over 21 per cent while the equity benchmark Sensex has gained nearly 8 per cent in the same period.
Bajaj Finance Q2 business update
In an exchange filing on Tuesday, October 3, the company said new loans booked during Q2FY24 grew by 26 per cent to 85.3 lakh as compared to 67.6 lakh in Q2FY23.
Assets under management (AUM) grew by 33 per cent to approximately ₹2,90,200 crore as of September 30, 2023, as compared to ₹2,18,366 crore as of September 30, 2022. AUM in Q2FY24 grew by approximately ₹20,100 crore, Bajaj Finance said.
The company said its deposits book stood at approximately ₹54,800 crore as of September 30 as compared to ₹39,422 crore as of September 30, 2022, registering a year-on-year (YoY) growth of 39 per cent.
“Consolidated net liquidity surplus stood at approximately ₹11,400 crore as of September 30, 2023. The company’s liquidity position remains strong. Customer franchise as of September 30, 2023, stood at 7.66 crore as compared to 6.29 crore YoY. In Q2 FY24, the customer franchise increased by 35.8 lakh,” said Bajaj Finance in its exchange filing.
Brokerages largely positive
Among the global brokerage firms, Jefferies maintained a buy call on the stock with a target price of ₹8,830 as it pointed out the robust AUM growth of the company in Q2FY24, reported CNBC-TV18.
Morgan Stanley maintained an overweight rating on Bajaj Finance with a target price of ₹10,300. The brokerage firm believes a 33-35 per cent AUM growth is possible versus the guidance of 29-31 per cent in FY24, reported CNBC-TV18.
Citi maintained a neutral view on Bajaj Finance with a target price of ₹7,800, reported CNBC-TV18.
Citi underscored the Q2 AUM sustained traction. But Citi, as reported by CNBC-TV18, expects a further contraction of more than 15 bps in Q2 over repricing of borrowing at a higher cost of funds.
“Cost ratios have likely peaked and should moderate hereon. Expect RoA/RoE profile to be healthy at 4.7 per cent/ 25 per cent,” CNBC-TV18 reported Citi saying so.
Brokerage firm Axis Securities has a buy call on Bajaj Finance stock with a target price of ₹8,590 as it expects the company to register a nearly 28 per cent CAGR AUM (asset under management) growth over FY23-25E.
Axis Securities said even as Bajaj Finance continues to invest in technology, operating leverage kicking in will help gradually improve its cost ratios over FY24. The brokerage firm added that Bajaj Finance remains well poised to deliver a healthy RoA (return on assets) of 4.6-4.7 per cent over FY23-25E.
Axis said the recent announcement of fundraising despite the company having a healthy tier-I capital of about 23 per cent, hints at the company gearing up to achieve its long-term growth ambitions.
“Post the fundraising, Bajaj Finance will remain well positioned to deliver a robust RoE (return on equity) of more than 21 per cent over the medium term versus our current estimates of 23-24.5 per cent,” said Axis Securities.
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