Bajaj Finance hits two-month low, down 8% in two days

The stock is trading at its lowest level since May 17 and has corrected 15 per cent from its all-time high level of Rs 3,761 touched on July 5

Bajaj Finance shares hit a two-month low of Rs 3,191, down 4 per cent in Monday's early morning trade on the BSE, and was the biggest loser among S&P BSE Sensex and Nifty50 stocks at 9:30 am.

The stock has fallen 8 per cent in two trading days on slowdown concerns. It is trading at its lowest level since May 17 and has corrected 15 per cent from its all-time high level of Rs 3,761 touched on July 5.

Post the management's interview on July 8, market concerns about growth slowdown had intensified, resulting in price correction. However, the company clarified on July 9 that business is as usual on an aggregate basis.

Motilal Oswal Securities said that among the various products offered by the company, only a few may have witnessed slowdown. Moreover, we expect high-ticket housing portfolio to have grown strongly with tailwinds from weakening competitive intensity.

The non-banking finance company, in its FY19 annual report, said the recent increases in international crude prices; some high frequency indicators — such as growth in manufacturing and capital goods, the Index of Industrial Production, auto sales — suggest a significant moderation in activity, amid a slowing global economy.

With a large customer franchise, strong liquidity position, diversified portfolio mix, granular geographical distribution and robust risk metrics, the management is confident of successfully dealing with these challenges in FY20, it said.

“Historically, macro concerns (IL&FS/ Demonetization/ Taper tantrum) have been an opportunity to buy this high growth franchise into a correction as they have had little correlation with Bajaj Finance’s financial performance. Higher competition in the unsecured segment is not reflected in either growth or ROA compression. Valuations look expensive but we believe are sustainable if the company continues to print 35 per cent plus loan growth with improving cost ratios, resulting in positive earnings revisions for F20,” analysts at JP Morgan said in a note.

Bajaj Finance's board of directors is scheduled to meet on Thursday, to consider the unaudited financial results for the quarter ending 30 June 2019 (Q1FY20).