Bajaj Finance market cap crosses Rs 1.5 trillion;Bajaj Finserv hit new high

Shares of Bajaj Finserv (Rs 6,533 per share) and its lending and wealth advisory arm Bajaj Finance (Rs 2,648 per share) have hit their respective record highs on the BSE in intra-day trade so far on Friday after reporting a strong set of numbers for the quarter ended June 2018 (Q1FY19).

Both these stock were trading higher by 5% each, as compared to 0.45% rise in the S&P BSE Sensex at 10.17 am. In past four months, Bajaj Finance (up 62%) and Bajaj Finserv (up 32%) have outperforming the market by surging more than 30%, against 11% rise in the benchmark index.

A sharp rally in Bajaj Finance stock has seen the market capitalisation (market cap) of the company crossing Rs 1.5 trillion today. Currently, with Rs 1.52 trillion market cap, Bajaj Finance stands at number 16th position in overall market cap ranking; the BSE data shows.

After a strong close in FY18, Bajaj Finance started FY19 with a bang as it reported 35% AUM (assets under management) growth and 60% pre-provisioning profit growth on year on year (YoY).

The company reported an 81% YoY jump in consolidated net profit at Rs 8.36 billion in the June quarter, helped by better operating expenses and increase in fee income. The company had posted a net profit of Rs 4.61 billion in the same quarter last year.

Calculated margin at 11.9% was 95bps higher on YoY basis, largely driven by increasing proportion of high-yield segments and some benefit from capital infusion. Asset quality remained improved with GNPAs at 1.4%. Portfolio quality is at its record best, barring the 2&3W segment.

“After dominating the mass affluent space, Bajaj Finance is now on its way to becoming a diversified NBFC with big plans in the mortgage space. We expect 29% loan book the compound annual growth rate (CAGR) over FY18-20E, margins around 11% and average credit costs at 130bps to drive earnings CAGR at 36%,”analysts at Antique Stock Broking said in result review.

“Bajaj Finance has reported RoAs of around 3.6% during FY18 which we expect to improve further to around 3.7% by FY20E considering improvement in C/I ratio along with lower credit costs to compensate for pressure on margins. Post recent dilution of Rs 45 billion, the company is expected to witness dip in RoEs however with accelerated leverage, especially in Housing Finance business, overall RoEs are expected to regain traction by FY20E,” analysts at Emkay Global Financial Services said in result update. The brokerage firm maintains ‘buy’ rating on the stock with 12 month target price of Rs 2,785.

Bajaj Finserv, holding company of the Bajaj Group’s financial services companies, had net profit growth of 41% to Rs 8.26 billion for the quarter ended June from the same period a year before.

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