Bajaj Finance soars 8%, hits 52-week high on strong Q1 business update

Assets under management (AUM) grew by 32 per cent to approximately Rs 2.7 trillion at the end of the June quarter

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Shares of Bajaj Finance hit a 52-week high of Rs 7,916.70, soaring 8 per cent on the BSE in Tuesday's intra-day trade, after the company's new loans booked during first quarter (April to June) of fiscal 2023-24 (Q1FY24) grew by 34 per cent to 9.94 million as compared to 7.42 million in Q1FY23.

The stock surpassed its previous high of Rs 7,777, touched on September 22, 2022. Meanwhile, shares of Bajaj Finserv rallied 6 per cent to Rs 1,632.95 on the BSE in the intra-day trade. In comparison, the S&P BSE Sensex was up 0.34 per cent at 65,427 at 09:35 AM.

In its quarterly update, the non banking finance company (NBFC) said that the assets under management (AUM) grew by 32 per cent to approximately Rs 2.7 trillion at the end of the quarter. The company recorded highest-ever quarterly increase in its AUM of approximately Rs 22,700 crore in Q1FY24.

Customer franchise as of June 30, 2023 stood at 72.98 million, up from 60.30 million as of June 30, 2022. The company recorded highest-ever quarterly increase in its customer franchise of 3.84 million in Q1FY24.

AUM growth was ahead of expectations, and suggests that the disbursements were strong across most product segments, Motilal Oswal Financial Services said in a note.

In the past five trading days, shares of Bajaj Finance has surged 13 per cent after S&P Global Ratings, on June 26, upgraded the company on view that domestic financial institutions in India will continue to improve their asset quality, benefiting from good economic prospects, and structural improvements in the operating conditions.

"We upgraded Bajaj Finance to reflect the company's strengthening earnings and asset quality amid an improvement in operating conditions. We believe the finance company's continuing access to low-cost (or differentiated) funding will also support its credit profile," S&P Global Ratings said.

According to the global ratings agency, Bajaj Finance can absorb the impact of higher inflation and interest rates in India. The country's robust economic growth should support borrowers' creditworthiness. The company's adequate underwriting standards and largely mass-affluent borrowers (other than in the auto-finance business) temper the higher risk associated with a sizable unsecured consumer lending book.

The stable outlook on Bajaj Finance reflects that the company will maintain its strong market position and healthy capital level over the next two years. "We also expect Bajaj Finance's liquidity and funding profile to remain adequate over the period," S&P Global Ratings said.

Technical View

Bias: Positive

Target: Rs 8,440

Support: Rs 7,700; Rs 7,580

Resistance: Rs 7,985

With today's strong up move, the stock is seen trading firmly above the higher-end of the Bollinger Bands, both, on the daily and weekly chart. The short-term bias is likely to remain positive as long as the stock sustains above the Rs 7,580 - 7,700 support range.

The stock has logged back-to-back gains in the last three months, and is now up a solid 41 per cent from the March close. The monthly chart suggests that the stock could face some resistance around Rs 7,985 - which is the higher-end of the monthly Bollinger Bands, above which the stock can rally towards Rs 8,440 - the monthly trend line resistance.

(With inputs from Rex Cano)