Bajaj Finance shares soar 8%, marking their largest daily gain in almost a year. The stock reaches a near two-year high, closing at ₹7,868 apiece on the NSE, up 7.3% from the previous close. This surge extends the stock’s winning streak to six consecutive sessions.
Bajaj Finance Reports Strong Q1 Performance
Bajaj Finance, a subsidiary of Bajaj Finserv, has recently released its business update for the first quarter of the fiscal year 2024. The company’s shares witnessed a significant surge, reaching a near two-year high and posting their biggest single-day gain in almost a year. This positive momentum was fueled by robust volume and loan growth, as well as healthy new customer acquisition.
In Q1 FY23, Bajaj Finance‘s loan book grew by an impressive 34% to 9.9 million, compared to 7.2 million in the corresponding period the previous year. The company also recorded its highest ever quarterly increase in customer franchise, adding approximately 3.84 million new customers during the quarter. These figures highlight the strong growth trajectory and increasing market penetration of Bajaj Finance.
Additionally, the company’s assets under management (AUM) witnessed a significant growth of 32% to around ₹270,050 crore in Q1 FY24, compared to ₹204,018 crore in Q1 FY23. This remarkable increase in AUM can be attributed to the company’s continued focus on expanding its lending portfolio and serving a diverse range of customers.
Furthermore, Bajaj Finance’s consolidated net liquidity surplus stood at approximately ₹12,700 crore as of June 30, 2024. The company’s liquidity position remains strong, supported by a rise in the deposit book to ₹49,900 crore, representing a YoY growth of 46%.
Brokerage Upgrades and Positive Outlook
The impressive performance and strong business update from Bajaj Finance have drawn positive attention from leading global brokerages. CLSA upgraded the stock to ‘Buy’ from ‘Outperform’ and raised the target price to ₹9,000 per share. The brokerage highlighted Bajaj Finance’s loan growth surpassing expectations and the potential for further upside in valuation.
Morgan Stanley also maintained an overweight rating on the stock and raised the target price to ₹9,250 per share. The brokerage emphasized the company’s strong credit track record and noted that its return on assets (ROA) is at a historical high. These factors contribute to the positive outlook for Bajaj Finance, which could lead to a re-rating of the stock.
The bullish stance from these prominent brokerages reflects confidence in Bajaj Finance’s growth prospects and its ability to deliver sustainable performance in the coming quarters.
Positive Market Response and Share Price Movement
Bajaj Finance’s strong Q1 performance has resonated well with the market, leading to a rally in its share price. Year-to-date, the stock has surged by nearly 18%, outperforming the benchmark Nifty50 index. This positive market response indicates investor confidence and optimism in the company’s future growth trajectory.
On Tuesday, July 4, Bajaj Finance’s shares touched a 52-week high of ₹7,916.70 on the BSE and closed at ₹7,868, up 7.3% from the previous close. The stock’s upward momentum has been supported by its robust loan growth, increasing customer franchise, and substantial AUM expansion.
The strong market performance of Bajaj Finance reflects the company’s ability to adapt to evolving market conditions, maintain a competitive edge, and deliver value to its shareholders.
Analysts’ View and Future Outlook
Leading investment advisory firms such as Jefferies, CLSA, Morgan Stanley, and Citi have maintained a positive outlook on Bajaj Finance following its strong Q1 performance. These firms have revised their target prices, reflecting increased confidence in the company’s growth potential.
Analysts believe that Bajaj Finance’s aggressive growth approach and deep market penetration position it for further expansion. The company’s consistent customer additions, along with its focus on increasing its physical presence in semi-urban and rural areas, demonstrate its commitment to reaching a wider customer base.
With accelerating AUM growth and improving acquisition and cross-sell metrics, analysts anticipate potential valuation re-rating and long-term value creation for Bajaj Finance. The stock’s current price-to-book value and price-to-earnings ratios are considered attractive, offering opportunities for investors.
Overall, Bajaj Finance’s strong Q1 performance and positive market response have positioned the company for continued growth and success in the future.
