Bajaj Finance gains 3%, nears record high on QIP launch report

The QIP, for an aggregate amount of Rs 8,500 crore, is likely to be between Rs 3,810-3,900 per share

Shares of Bajaj Finance were trading higher for the third straight day, up 3 per cent at Rs 4,175 on the BSE on Monday, on report that the company will look to issue its qualified Institutional placement (QIP) this week. The stock has gained 5 per cent in the past three days, and was quoting close to its all-time high level of Rs 4,220 touched on October 22, 2019 in the intra-day trade.

On September 17, the board of directors of Bajaj Finance had approved raising of capital through a QIP for an aggregate amount not exceeding Rs 8,500 crore. According to media reports, the price band for the QIP is likely to be between Rs 3,810–3,900 per share. Moreover, five to six domestic and foreign bankers have been appointed for the issue of the QIP.

Earlier during FY2018, Bajaj Finance had raised approximately Rs 4,500 crore through the QIP route. The company used the net proceeds of the issue for augmenting the Tier I capital, as long-term resources for meeting funding requirements for its business purposes and capital expenditure.

Thus far in the calendar year 2019, the stock has outperformed the market by surging 58 per cent, as compared to a 12 per cent rise in the S&P BSE Sensex.

Analysts at JP Morgan have ‘overweight’ rating on Bajaj Finance with March 2020 target price of Rs 4,500 per share.

The brokerage firm believes that Bajaj Finance’s consumer business can deliver sector-leading loan and earnings growth over the next three years driven by new customer acquisitions and distribution footprint scale-up.

"A strong run-up in the stock and elevated valuations do pose a risk, but underlying fundamentals support those rich valuations," it added.

At 10:35 am, the stock was up 2 per cent at Rs 4,156, as against a 0.49 per cent rise in the Sensex. A combined 901,657 shares have changed hands on the counter on the BSE and NSE so far.