The shares of one of India’s leading non-banking financial companies (NBFC) received a 37 percent upside from Morgan stanley.
On Friday, Bajaj Finance shares were trading at Rs 7,300, down 0.91 percent from the previous close on the National Stock Exchange. The company has a market capitalization of Rs 4,51,339 crore.
Bajaj Finance revenues increased by 34 percent year on year from Rs 9,970 crore in Q2FY23 to Rs 13,378 crore in Q2FY24, while net profit has increased by 28 percent from Rs 2,781 crore to Rs 3,551 crore.
Bajaj Finance Ltd shares have gained 11 percent on a year-to-date basis and 12 percent in a year.
Morgan Stanley has given an overweight call to Bajaj Finance Ltd. The brokerage has given the target price of Rs 10,000, representing an upside of 37 percent from Friday’s close price of Rs 7,289.
The brokerage says that the Securities Appellate Tribunal (SAT) has canceled SEBI’s decisions on Karvy. This means the company will receive their outstanding amounts along with interest. If funds are returned, it may affect the estimated profit of the company for the current financial year and the next financial year by 1 to 2.4 percent
Bajaj Finance reported a charge-off of Rs 3.2 billion in FY20. If this amount is recuperated, it could represent 1.7% and 1.3% of the projected PAT for F24e and F25e, respectively. Including interest, the figures could be 2.4% and 1.9%.
In the September quarter of 2024, the Company delivered an AUM growth of Rs 20,167 crore, Meanwhile, NBFC booked 8.55 MM new loans and added 3.58 MM new customers.
Bajaj Finance Limited is engaged in the business of lending for retail, SME, and commercial customers with a significant presence in urban and rural India.
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.
Bajaj Finance’s cost of financing is 250 basis points higher than that of major banks, which makes the company uncompetitive.
Written by Omkar Chitnis
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