Bajaj Finance hits 52-week high on robust Q2 growth; brokerages maintain ‘buy’

Bajaj Finance’s assets under management (AUM) grew by 33 percent to approximately Rs 2,90,200 crore by the end of September.

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Bajaj Finance bucked the weak market trend to hit its 52-week high of Rs 8,040.55 in early trade on October 4 after it posted robust business growth in the second quarter of this fiscal year, leading to many brokerages raising their target price for the stock.

At 10.05 am, shares of the non-banking financial company were trading 0.21 percent down at Rs 7,952.40 on the BSE.

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In its Q2 business update, Bajaj Finance said it posted a 26 percent growth in new loans booked during the July to September quarter at 85.3 lakh as compared to 67.6 lakh in the corresponding period last year.

“Customer franchise as of 30 September 2023 stood at 76.56 MM as compared to 62.91 MM as of 30 September 2022. In Q2 FY24, the customer franchise increased by 3.58 MM,” it said in a post-market hours filing on October 3.

Its deposits book stood at approximately Rs 54,800 crore as of September 30, 2023 as compared to Rs 39,422 crore in the same month last year, a year-on-year growth of 39 percent.

Bajaj Finance added that its liquidity position remains strong with its consolidated net liquidity surplus at approximately Rs 11,400 crore at the end of last month.

Bajaj Finance’s assets under management (AUM) grew by 33 percent to approximately Rs 290,200 crore by the end of September as compared to Rs 218,366 crore at the end of September the previous year. “AUM in Q2 FY24 grew by approximately Rs 20,100 crore,” it added.

Brokerage Views

“Bajaj Finance’s 2Q FY24 pre-qtr update shows robust AUM growth of 33 percent YoY vs. 32 percent in 1Q and 29 percent YoY in 4Q and is higher than our estimate of 29 percent in FY24E,” Jefferies said in a note.

Within NBFCs, Bajaj Finance is one of our top picks, it added.

Jefferies has a target price of Rs 8,830 for the stock, which represents a potential upside of over 10 percent from its current levels.

Similarly, Morgan Stanley said it is ‘overweight’ on Bajaj Finance, and raised its target price to Rs 10,300 from Rs 9,500 earlier.

It also views 33-35 percent FY24 AUM growth as possible compared to the guidance of 29-31 percent.

However, Citi has a ‘neutral’ rating on the stock, with target price of Rs 7,800.

The global brokerage firm said cost ratios have likely peaked and should moderate hereon.

Given stress in rural B2C segment, it is building in 10-15 bps QoQ increase in gross NPAs for Bajaj Finance.

“Overall, Expect RoA/RoE profile to be healthy at 4.7 percent/25 percent,” it added.

Domestic brokerage firm Motilal Oswal said the AUM growth was ahead of expectations.

AUM growth of 33 percent YoY suggests that disbursements were strong in most product segments, including 2-wheelers across multiple OEMs, it pointed out.

“Trend for Bajaj Finance remains extremely strong and one of the technical indicators from a long-term perspective has given a buy signal. Rs 8,000-8,100 is going to act as a very crucial resistance zone for the stock, so if it sustains above that level, then it could breach its October 2021 highs and that means the stock could have a very strong upside potential of Rs 8,500-8,800 in the short term,” Aamar Deo Singh of AngelOne said.

Shares of Bajaj Finance are up over 21 percent this year till date.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.