The shares of one of India’s leading non-banking financial firms gained around 1.5 percent to Rs 7,323.95 per share after brokerages gave an upside of up to 41 percent despite the RBI’s sanction on the company’s two lending products.
At 1:15 p.m., On the National Stock Exchange, Bajaj Finance Ltd shares were trading at Rs 7,297, up Rs 72.30 or 1.01 percent from the previous close price of Rs 7,224.30 per share.
Bajaj Finance has a significant market share of 45% in the NBFC segment in commercial/personal loans, and the company has achieved a 23% CAGR, which no other Indian bank, NBFC has witnessed in the last couple of decades.
The company’s shares have delivered returns of 9 percent in six months and 6 percent in a year.
The company’s revenue has increased by 34 percent year on year, from Rs 9,968 crore in Q1FY23 to Rs 13,378 crore in Q1FY24. During the same time, net profit has increased by 28 percent from Rs 2,780 crore to Rs 3,550 crore.
On Wednesday, the RBI directed Bajaj Finance to immediately stop sanctioning and disbursing loans under its two lending products such as eCOM and Insta EMI Card for violations of its new digital lending guidelines, launched last year.
Jefferies has initiated a ‘buy’ rating on Bajaj Finance with a target price of Rs 9,470 per share, representing an upside potential of up to 30 percent from the current price level.
The rationale behind providing such a recommendation is
● According to the brokerage, As of September 23, Bajaj Finance has 77 million customers, 42 million of them have EMI cards and 4 million of them have Insta EMI Cards. That signifies Insta EMI card Base is 5% of total customers.
● Analysts believe that flaws revealed by the RBI are primarily operational and do not raise any concerns regarding Bajaj Finance’s procedures or product structures in these two sourcing channels.
Morgan Stanley has maintained an ‘overweight’ rating on Bajaj Finance with a target of Rs 10,300 per share, representing an upside potential of up to 41 percent from the current price level. The brokerage notes the stock could be under pressure in the near term.
The rationale behind providing such a recommendation is
● Brokerage notes that the acquisition of new digital EMI cards seems unaffected, foreseeing near-term stock pressure. However, they anticipate a prompt resolution, mitigating the EPS impact.
Bajaj Finance is India’s leading non-banking financial company (NBFC) which is engaged in lending for retail, SME, and commercial customers with a significant presence in urban and rural India.
Written by Omkar Chitnis
