Bajaj Finance defied the overall market trend by reaching a 52-week high of Rs 8,040.55 in early trading on October 4. This surge came after the company reported robust business growth in the second quarter of the fiscal year, prompting several brokerages to raise their target prices for the stock.
As of 10:05 am, shares of the non-banking financial company were trading at Rs 7,952.40 on the BSE, down 0.21 percent.
In its Q2 business update, Bajaj Finance revealed a 26 percent increase in new loans booked during the July to September quarter, reaching 85.3 lakh compared to 67.6 lakh in the same period the previous year.
As of September 30, 2023, the customer franchise stood at 76.56 million, up from 62.91 million on September 30, 2022, with an increase of 3.58 million in Q2 FY24.
The deposits book grew to approximately Rs 54,800 crore as of September 30, 2023, compared to Rs 39,422 crore in the same month the previous year, reflecting a YoY growth of 39 percent.
Bajaj Finance reported a strong liquidity position, with a consolidated net liquidity surplus of approximately Rs 11,400 crore at the end of September.
The assets under management (AUM) increased by 33 percent to approximately Rs 290,200 crore by the end of September, compared to Rs 218,366 crore in the same period the previous year, with an increase of approximately Rs 20,100 crore in AUM during Q2 FY24.
Jefferies commented, “Bajaj Finance’s 2Q FY24 pre-qtr update shows robust AUM growth of 33 percent YoY vs. 32 percent in 1Q and 29 percent YoY in 4Q and is higher than our estimate of 29 percent in FY24E.” It views Bajaj Finance as one of its top picks among NBFCs and has set a target price of Rs 8,830 for the stock.
Morgan Stanley is ‘overweight’ on Bajaj Finance and has raised its target price to Rs 10,300 from Rs 9,500. It also believes that a 33-35 percent FY24 AUM growth is possible, exceeding the guidance of 29-31 percent.
Citi, however, has a ‘neutral’ rating on the stock with a target price of Rs 7,800, citing likely cost ratio moderation and building in a 10-15 bps QoQ increase in gross NPAs for Bajaj Finance due to stress in the rural B2C segment.
Motilal Oswal, a domestic brokerage firm, noted that the AUM growth exceeded expectations and suggests strong disbursements in various product segments. Shares of Bajaj Finance have risen over 21 percent year-to-date.
According to Aamar Deo Singh of AngelOne, the stock has significant upside potential if it sustains above the crucial resistance zone of Rs 8,000-8,100.