Bajaj Finance shares hit new high; Infosys nears record high

Bajaj Finance hit a new high of Rs 2,190, up 1.6% on the BSE, while Infosys touched a fresh 52-week high of Rs 1,257, up 1.7%, trading close to its all-time high of Rs 1,278 hit on June 3, 2016.

Shares of Bajaj Finance hit a new high of Rs 2,190 per share, up 1.6% on the BSE in early morning trade. The stock of finance company surpassed its previous high of Rs 2,177 recorded on May 22, 2018 in intra-day trade.

Shares of information technology (IT) bellwether Infosys touched a fresh 52-week high of Rs 1,257, up 1.7%, trading close to its all-time high of Rs 1,278 hit on June 3, 2016 in intra-day trade.

Thus far in calendar year 2018 (CY18), Bajaj Finance (up 25%) and Infosys (up 21%) have outperformed the market by gaining more than 20%, as compared to 4% rise in the S&P BSE Sensex.

Infosys in past two months post January-March 2018 quarter (Q4FY18) results has rallied 13% against 4.2% rise in the benchmark index.

The company’s management guided for 6-8% constant currency (CC) revenue growth in FY19 (7-9% in USD terms), while margin band at 22-24% is lower than expectations, mainly due to investments to be made in the business, in growing digital, re-skilling employees and increasing localisation of US staff.

“A positive aspect is high cash return to shareholders, with up to 70% of FCF (free cash flow) to be paid out, in addition to which the IT major will pay out Rs 130 billion, with Rs 26 billion in the form of a special Rs 10/share dividend and the balance potentially through a share buy back,” Reliance Securities said in Q4FY18 result update.

A new CEO at the helm, positive IT budget outlook, potential improvement in the US economy, possible share buy-back and higher cash return to shareholders provide cushion to the stock price, the brokerage firm said with ‘buy’ rating on the stock and 12 month target price of Rs 1,290.

Since May 16, post Q4FY18 results, Bajaj Finance has surged 14% against a marginal 0.13% rise in the Sensex. The  company had reported a better than expected 60% year on year jumped in its standalone net profit at Rs 7.21 billion in March quarter (Q4FY18). Assets quality of the company improves during the quarter with gross non-performing assets (NPA) and net NPA as of March 31, 2018 stood at 1.48% and 0.38% respectively.

The analysts remain constructive on the stock considering robust growth visibility emanating from superior management and diversified product franchise. Any pressure on margins from competition and asset mix should get mitigated by gains derived from better cost productivity, according to brokerage firm IIFL Wealth Research.