3 March 2024

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Bajaj Finance

Bajaj Finance share price increases 7% on strong Q1 business update; brokerages raise target

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After the company published a positive business update for the quarter ended June 2023, with robust volume and loan growth and healthy new customer acquisition, Bajaj Finance’s share price rose nearly 8% to a high of 7,916.70 per share on the BSE.

The NBFC’s loan book increased 34% to 9.9 million in the April-June quarter of the current fiscal year, up from 7.2 million in the same period previous year. The company’s client franchise increased to 72.98 MM as of June 30, 2023, up from 60.30 MM the previous year.

In Q1FY24, Bajaj Finance saw its biggest quarterly rise in customer franchise, totaling 3.84 million.

Assets under management (AUM) increased by 32% in Q1FY24 to roughly 270,050 crore, up from 204,018 crore in Q1FY23. In Q1FY24, the company reported the biggest quarterly rise in AUM of around 22,700 crore.

Bajaj Finance

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As of June 30, 2023, the company’s consolidated net liquidity surplus was roughly 12,700 crore. Furthermore, the deposit book increased by 46% year on year to 49,900 crore from 34,102 crore the previous year.

According to global brokerage CLSA, Bajaj Finance’s loan growth exceeded expectations, and its price offered more potential.

Bajaj Finance New Target

CLSA upgraded Bajaj Finance to ‘Buy’ from ‘Outperform’ and increased the target price to 9,000 per share from 6,000 previously.

Bajaj Finance reported very strong pre-quarterly numbers for the first quarter of fiscal year 24.” While we predicted 6%-7% quarterly AUM growth, the company generated 9% quarterly growth, bringing the year-to-date total to 32%. This is exceptional for an NBFC of its scale,” CLSA stated. 

Furthermore, new customer acquisition was good, and payout volume increased by 34% year on year. This offers CLSA confidence that loan growth was not only driven by ticket size. 

Morgan Stanley maintained its Overweight rating on the stock and increased its target price to $9,250 per share.

“AUM growth of 9.2% QoQ, 32% YoY, with value and volume growth and strong customer acquisition should dispel loan growth debate,” Morgan Stanley wrote.

The brokerage stated that the NBFC has a great credit track record and a historically high ROA. This large liquid stock is expected to re-rate to 30x F25e P/E.

So far this year, the share price of Bajaj Finance has increased by approximately 18%. 

At 9:55 a.m., Bajaj Finance shares were trading 6.44% higher on the BSE, at 7,808.00 per share.