Shares of Bajaj Finance are up 38 per cent from its June low of Rs 5,235.60. This could be a good buy on dips opportunity, said analysts following the NBFC’s September quarter results.
Analysts cited an improvement in asset quality, healthy acceleration in digital EMI card acquisitions, stable net interest margin (NIM), and expanding revenue streams, behind their optimism over the stock.
The September quarter growth was broad-based for Bajaj Finance across segments and the management expects the growth momentum to accelerate, even as it acknowledges greater competition in the consumer durables segment, JM Financial said in a note.
“Belying market concerns, NIMs continued to hold steady and we do not see a meaningful impact in 2HFY23 as well, given BAF’s adroit ALM management, the benefit of a long-standing track record and strong balance sheet,” JM Financial said, adding that “we remain positive on BAF’s digital transformation trajectory medium-term and expect strong earnings growth, customer addition trajectory to sustain.”
The brokerage has a target of Rs 9,000 on the stock.
It has delivered multibagger return to its investors as the stock has zoomed over 5,400 per cent in the last ten years.
KRChoksey believes that the housing subsidiary is expected to be the key driver for growth going ahead for Bajaj Finance.
“We remain bullish on the company’s strong pedigree, brand reputation, diverse product offerings, prudent risk management, and potential to achieve robust AUM growth in the medium to long term,” it said.
The brokerage house expects the company to maintain its strong performance and embrace the opportunity with improving trends in the real estate industry and an optimistic long-term outlook for the housing financing sector. It sees the value in stock at Rs 8,630.
Axis Securities said the asset quality metric for Bajaj Finance continues to improve and is currently at better than pre-Covid levels.
“The intensifying competition, increasing interest rates and scaling up of the housing book (lower-yields) is likely to weigh on the margins, however, Bajaj Finance continues to remain committed towards maintaining margins,” it added.
The brokerage firm has a ‘Buy’ rating on the stock with a target price of Rs 8,600.
According to Sonam Srivastava, Founder at Wright Research, the valuations remain elevated at 44 times price to earnings and 9 times price to book the company is already overvalued relative to its sector.
“Analysts’ targets are not too much higher than the current prices and we have seen selling happening in the counter post earnings. We would recommend buying at any correction from these levels as the prospects remain really strong in this slightly overbought counter,” she said.
Manoj Dalmia Founder and Director-Proficient Equities said Investors can accumulate at dips. The stock is consolidating in a range and one can expect some good moves above Rs 8,000.
The NBFC reported an 88 per cent YoY jump in its consolidated net profit at Rs 2,781 crore for the September quarter. Profit in the year-ago period stood at Rs 1,481 crore.
Total income grew by 29 per cent to Rs 9,972 crore for the quarter that ended September 2022 from Rs 7,735 crore in the same period last year.
The scrip closed 1.4 per cent lower at Rs 7104.15 on Tuesday.
