Bajaj Finance to acquire 26% stake in Pennant for Rs 267 crore; stock rises over 1%

Bajaj Finance is set to acquire a 26-percent stake in Pennant Technologies for Rs 267 crore in a cash deal. With a turnover of Rs 74.28 crore in FY23, Pennant provides technology services and software products for the banking and financial services industry. This is a strategic investment to strengthen its technology roadmap, Bajaj Finance said in its regulatory filing.

Bajaj Finance shares were trading nearly 1.5 percent higher at Rs 8,152 on the NSE at 9:26 am on October 17.

Bajaj Finance will acquire 5.71 lakh compulsorily convertible preference shares (Series A CCPS) of face value of Rs 100 each. Additionally, it would also buy 4.22 lakh equity shares from promoters and existing shareholders of Pennant. Bajaj Finance has suggested December 30 as an indicative time period for the completion of the acquisition.

Follow our market blog to catch all the live action

Q2 Result Expectations

The acquisition news comes ahead of Bajaj Finance’s second quarter (Q2FY24) earnings announcement, which is due later on October 17. The non-banking finance company is expected to report a sharp growth in Q2FY24 net profit with stable asset quality and strong loan growth. Its net interest income (NII) is also seen rising.

Brokerage firm Motilal Oswal Financial Services expects Bajaj Finance to report a decline of about 30 bps and 40 bps quarter-on-quarter (QoQ) in margins and spreads, respectively. Analysts at Phillip Capital see Bajaj Finance’s loan book to grow at 33 percent YoY. It also expects a mild increase in the cost of funds while asset quality may remain stable.

Also Read | Bajaj Finance Q2 preview: Profit may grow 30% YoY; pressure on margins likely

So far in 2023, Bajaj Finance share price has risen more than 24 percent, outperforming the benchmark Nifty 50, which has risen around 9 percent during this time. In the last six months, Bajaj Finance stock has rallied 37 percent.

Disclaimer: The views and investment tips expressed by investment 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.