Bajaj Finance investors are in a fix as the two-day correction in the NBFC stock has wiped out nearly Rs 33,500 crore in market cap. Shares of Bajaj Finance ended 7.2% lower at Rs 6,099.85 on Thursday after the NBFC reported lower-than-expected AUMs (Assets Under Management) growth in the December quarter.Extending their weakness in FridayтАЩs session, Bajaj Finance shares slipped another 2.6% intraday to Rs 5,941 level. With todayтАЩs correction, the Bajaj Finance stock has tumbled below Rs 6,000 level after six months (July 18, 2022). In the downtrend, the stock has also breached the Rs 6,000 target of global brokerage CLSA, which is of the view that the stock remains “unjustifiably expensive.”┬а
Shares of Bajaj Finance ended 1.95% or Rs 119.25 lower at Rs 5,980.60 on BSE today.
Kotak Institutional Equities is further bearish on the stock with a sell rating and a target of Rs 5,800. On the other hand, Jefferies has a hold rating with a target of Rs 8,160. The stock, which has plunged over 9% in two sessions declined 22.81% in the last one year. ┬а
At the current level, shares of Bajaj Finance are trading 25% lower to the 52-week high of Rs 8043.50 they hit on January 19, 2022. On the other hand, Bajaj Finance stock hit a 52 week low of Rs 5,235.60 on June 17, 2022. ┬а
In the afternoon session, the stock was trading 2% lower at Rs 5,977 on BSE. ┬а
Total 0.81 lakh shares of the firm changed hands amounting to a turnover of Rs 48.70 crore on BSE. Market cap of the NBFC fell to Rs 3.61 lakh crore.
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Bajaj Finance’s relative strength index (RSI) stands at 27.8 which signals the stock is oversold. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a price-to-equity (P/E) ratio of 37.22.┬а
HereтАЩs a look at what analysts said on the ongoing correction in Bajaj Finance and whether the stock is headed toward Rs 5,000 level. ┬а
Jigar S Patel, Senior Manager- Technical Research Analyst – Anand Rathi Shares and Stock Brokers said, тАЬSince last four months, the said counter has been making lower highs and lower lows structure which resulted into 22 % cut in price. In the last two trading session, we witnessed massive beating of 10% approx.. along with massive volume which indicates that downside is not over yet. Next credible support is seen around Rs 5600-5700 where one can go for fresh long. On the indicator front: Daily MACD has made negative cross below zero line which is hinting towards more weakness is coming sessions. Last but not least the said counter is trading below all major exponential moving averages which is a matter of big concern. One can buy Bajaj Finance near Rs 5600-5700 levels only with upside target of Rs 6300 and stop loss will be Rs 5300.тАЭ┬а
Sneha Seth, Derivatives Research Analyst, Angel One Ltd, said, “Considering the recent price action, undoubtedly the trend is strong bearish but looking at the broader picture, it’s not advisable to exit after 20 per cent price decline from recent high. Traders should stay on the sidelines and it would be interesting to see how this stock behaves around its cluster of support i.e. Rs 6,000-5,800.”┬а
A R Ramachandran from Tips2trades, said, “The stock is starting to get into oversold territory and short sellers are advised to book profits at current levels.”┬а
Akshay Ashok – Research Analyst Prabhudas Lilladher said, “Although AUM growth in the business update was marginally below expectations, customer acquisition momentum remains intact and the company is in line to achieve target of acquiring 10-11 million customers in 2023. Incremental portfolio growth in the coming quarters will come by increasing stickiness of new to franchise customers (NTF).”
Rahul Malani, Analyst Banking & NBFC, Fundamental Research, Sharekhan by BNP Paribas said,”Bajaj Finance reported its Q3FY23 business updates where in AUM growth reported was 27% YoY/6% QoQ vs 31% YoY/ 7% QoQ in Q2FY23. AUM growth moderated but still remained healthy. However, if we look back in pre covid times, BAF reported around 37% CAGR growth in AUM in the last decade. It was the fastest growing lender and growth differentials versus banks and other NBFCs was also large. Thus, the stock got eventually re-rated from 2x 1 year forward book value to 8x 1 year forward book value over the same period. Now after the post pandemic times, BAF has been reporting 25-30% growth in the AUM and the growth differentials has also narrowed due to faster loan growth acceleration taking place at banks and other NBFCs. Thus we believe that valuation multiple de-rating has happened as AUM growth is tapering down for BAF and growth differentials is also narrowing with peers. Moreover, there are also concerns around strong competition emerging in future due to the existing fintech players and new players (Jio Fin) entering the customer segment which BAF is catering to. Currently, it trades at 6.4x 1 year forward book value. As far as long-term investment thesis is concerned, we continue to like the franchise built around strong competitive moats which is difficult to replicate along with strong execution capabilities, underwriting, data analytics and we believe BAF is poised to deliver strong sector-leading ROA/ ROE of 4.7%/ 4.8% 22%/23% in FY24E/FY25E.┬а We remain upbeat about strong earnings growth and longevity of the franchise going forward.”
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