Bajaj Finance m-cap crosses Rs 3 trillion as stock hits new high

Growth guidance of around 25 per cent for FY22E and opportunity to apply for banking licence have resulted in renewed interest of investors in the stock, analysts said

Bajaj Finance entered the elite club of companies with a market capitalisation (market-cap) of Rs 3 trillion after the company's stock price hit a new high of Rs 4,992.55, up 2 per cent in Tuesday's otherwise weak market.

The stock of the non-banking finance company (NBFC) surpassed its previous high of Rs 4,957.50, touched on November 27, 2020.

At 11:42 am, Bajaj Finance's market-capitalisation stood at Rs 3.01 trillion, the exchange data shows. In comparison, the S&P BSE Sensex was down 0.47 per cent at 46,035 points. Currently, Bajaj Finance, is at the ninth position in terms of overall market-cap ranking and companies having market-cap of over Rs 3-trillion.

In the past three months, the stock has gained 42 per cent, as compared to 18 per cent rise in the S&P BSE Sensex. For the July-September quarter (Q2FY21) quarter, Bajaj Finance had reported in-line performance with elevated Covid provisions, lower opex, which enabled higher-than-expected operating profit and standstill status kept the asset quality stable. However, analysts’ outlook on the company’s long-term prospects remains positive.

“Bajaj Finance has sailed through the headwinds and emerged stronger with a leaner operating model and robust growth guidance. The Reserve Bank of India’s (RBI’s) new banking licence review has recommended that large NBFCs with > Rs 50,000 crore assets with 10 year existence can apply for banking licence,” analysts at ICICI Securities said in a stock update.

Also, growth guidance of around 25 per cent for FY22E and opportunity to apply for banking licence have resulted in renewed interest of investors in the stock, the brokerage firm said with ‘buy’ rating on the stock with target price of Rs 5,900.

“We had upgraded the stock to BUY post quarterly earnings but the multiple expansion has been far higher. We believe premium multiples are returning for Bajaj Finance”, it said.