Bajaj Finance: Why is it Going Down?

Bajaj Finance: Why is it Falling?

Bajaj Finance has been one of the biggest wealth creators in the Indian stock market in recent years. The share price of the Pune headquartered non-banking finance company (NBFC) has soared almost 240% over the past five years.

But the last week has been painful for the shareholders of the company as the stock has tanked 8%. But why? Why is such a multibagger falling so sharply? Let’s try to understand.

Bajaj Finance: Q3 Update

Slowdown in AUM Growth: Bajaj Finance’s AUM recorded a yearly growth of 27% to Rs 2.3 lakh crores. However, a quarterly growth of just 5.7% came in below expectations. This is primarily the reason why the share price of the company is currently on a downward spiral.

Customer Franchise Growth: The company reported its highest ever customer franchise growth in this quarter. Customer franchise increased to 66 million from 55.4 million in the year-ago period. 

New Loans Growth: Moreover, the NBFC also recorded its highest ever growth in new loans in this quarter too. In the quarter, the company booked 7.8 million new loans which denotes a growth of 5.4% from the previous year.

Deposits Growth: Bajaj Finance also recorded strong growth in its deposits. The company’s deposits balance grew 41% from the previous year to Rs 43,000 crores.

Bajaj Finance: Analysts View

CLSA: Renowned brokerage Jefferies has kept a hold rating on the stock as it believes slower growth can hurt its share price in the near term.

Jefferies: Global brokerage CLSA has a sell rating on the stock as it believes that the NBFC’s valuations have reached uncomfortable levels.

Motilal Oswal:The domestic brokerage believed that its AUM growth came in lower than expectations. However, it still maintains a Buy rating on the stock.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.