Shares of Bajaj Finance Ltd and Bajaj Finserv Ltd have seen a substantial rally, with gains up to 9% in recent trading sessions. This article explores the reasons behind this surge, highlighting key metrics, market trends, and expert insights. If you’re an investor or someone keen on understanding the stock market dynamics, this analysis is tailored for you.
Overview of Bajaj Finance and Bajaj Finserv
Bajaj Finance: As one of India’s largest non-banking financial companies (NBFCs), Bajaj Finance offers diversified lending across retail, SME, and commercial customers. It also accepts deposits and provides an array of financial services.
Bajaj Finserv: A financial services powerhouse, Bajaj Finserv manages wealth, insurance, and financing solutions. It’s a holding company for various Bajaj group financial services.
Both companies have demonstrated robust market performance over the years, supported by strategic initiatives and a diversified business portfolio.
Key Highlights of the Recent Rally
Bajaj Finance Stock Performance
- Intraday Surge: Bajaj Finance shares jumped 6% intraday to reach Rs 7,749.95 on BSE, from the previous close of Rs 6,936.65.
- Moving Averages: The stock trades higher than its 5-day, 10-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a strong upward momentum.
- Market Cap: Bajaj Finance’s market capitalization rose to Rs 4.53 lakh crore.
Bajaj Finserv Stock Performance
- Price Gain: Bajaj Finserv’s shares climbed 8.92%, hitting Rs 1,717.45 intraday.
- Volume Traded: Approximately 1.76 lakh shares were exchanged, translating to a turnover of Rs 29.41 crore.
- Market Cap: The market capitalization increased to Rs 2.73 lakh crore.
Factors Driving the Surge
Bullish Outlook from Citi
Global brokerage firm Citi has reiterated a “Buy” rating on Bajaj Finance, setting a target price of Rs 8,150. The firm’s optimistic forecast includes:
- Q3 Expectations: Anticipated 6% quarter-on-quarter (QoQ) and 7% year-on-year (YoY) growth in assets under management (AUM).
- Catalyst Watch: A 90-day “catalyst watch” period was introduced, reflecting positive expectations for Bajaj Finance’s Q3 performance.
Strong Business Fundamentals
- Diverse Lending Portfolio:
- Bajaj Finance’s lending spans across mortgages, sales financing, securities lending, and new business verticals.
- Bajaj Finserv focuses on wealth management, insurance, and other financial services.
- Improving Credit Costs:
- Marginal uptick in credit costs, estimated at 2.2-2.25% for Q3.
- Stability in net interest margins (NIMs), with a potential rise of 3-5 basis points (bps).
- Market Leadership:
- Bajaj Finance remains a top gainer on Sensex and Nifty indices.
- Bajaj Finserv continues to lead in wealth management and insurance.
Financial Performance Snapshot
| Metric | Bajaj Finance | Bajaj Finserv |
|---|---|---|
| Market Cap | Rs 4.53 lakh crore | Rs 2.73 lakh crore |
| Intraday High | Rs 7,749.95 | Rs 1,717.45 |
| Relative Strength Index (RSI) | 52.5 (neutral) | 38.6 (neutral) |
| 1-Year Beta | 1.1 (high volatility) | 1 (average volatility) |
| YoY AUM Growth | 28.8% | Not applicable |
Peer Comparison
| Company Name | Current Price (Rs) | Market Cap (Rs Cr) | P/E Ratio | Dividend Yield |
|---|---|---|---|---|
| Bajaj Finance | 7,389 | 4,57,300 | 29.7 | 0.49% |
| Bajaj Finserv | 1,700 | 2,71,485 | 31.94 | 0.42% |
| Shriram Finance | 3,060 | 1,15,151 | 14.69 | 1.15% |
| Cholamandalam Inv. | 1,271 | 1,06,869 | 27.74 | 0.35% |
Technical Analysis
Bajaj Finance
- Support Levels: Strong support at Rs 7,000.
- Resistance Levels: Immediate resistance at Rs 7,830 (52-week high).
- Indicators: Neutral RSI at 52.5 signals neither overbought nor oversold conditions.
Bajaj Finserv
- Support Levels: Key support at Rs 1,650.
- Resistance Levels: Resistance at Rs 1,800.
- Indicators: RSI at 38.6 suggests consolidation with upward potential.
Investor Insights
What Experts Are Saying
- Bullish Sentiment:
- Analysts from Mirae Asset Sharehan and Citi expect earnings growth to align with asset growth by FY26.
- Positive NIM bias and reduced credit costs boost investor confidence.
- Potential Risks:
- High valuations (P/E ratio of 29.7 for Bajaj Finance) may deter conservative investors.
- Market volatility remains a factor given the stocks’ high beta values.
Conclusion
Bajaj Finance and Bajaj Finserv have emerged as top performers, driven by robust business fundamentals, positive market sentiment, and strong financial metrics. Investors looking to capitalize on these growth stories should evaluate their risk appetite and investment horizon.
Disclaimer: The content provided is for informational purposes only and should not be construed as financial advice. Please consult a financial advisor before making any investment decisions.