Bajaj Finance hits new high; stock rises 32% in two months since Q4 results

Bajaj Finance hit a new high of Rs 2,460 on the BSE, rising by 2% today and extending their 2.5% gain on Thursday, on expectations of healthy financial performance in Q1FY19.

Shares of Bajaj Finance hit a new high of Rs 2,460 per share on the BSE, rising by 2% today and extending their 2.5% gain on Thursday, on expectations of healthy financial performance for the quarter ended June 2018 (Q1FY19).

In past two months after the March quarter (Q4FY18) results, Bajaj Finance have outperformed the market by surging 32% as compared to 2.8% rise in the S&P BSE Sensex.

The company had reported a better than expected 60% year on year (YoY) jumped in its standalone net profit at Rs 7.21 billion in Q4FY18. Net revenue from operations grew 40% at Rs 23.43 billion against Rs 16.78 billion in the corresponding quarter of previous fiscal.

Analysts at JP Morgan have ‘overweight’ rating on Bajaj Finance with 12 month target price of Rs 2,800.

“We believe Bajaj Finance will continue to deliver 30%+ loan and earnings growth over the next two years, driven by new product line additions, network expansion and overall fairly strong growth in the unsecured retail credit portfolio. We believe the scope for operating cost reduction should offset any pressure on ROA driven by margin compression on potentially higher competition as large private sector banks become more aggressive in this space,” the foreign brokerage firm said in recent report.

Motilal Oswal Securities expects assets under management (AUM) growth of 37% YoY, driven by consumer durable financing, in which the company continues to increase its market share.

Bajaj Finance to report 44.7% growth in net profit, on back of 37.6% rise in the net income for the quarter. Calculated margin is expected to remain largely stable on YoY basis at 12.6%, it added.

“Bajaj Finance’s AUM growth is likely to be strong on the back of healthy demand in the consumer segment. Net interest margins are expected to improve marginally on a sequential basis on the back of higher yields and on accrual of the benefits emanating from the recent equity capital raising. Asset quality likely to remain stable,” Emkay Global Financial Services said in Q1FY19 results preview.