Unlocking Investment Potential: Bajaj Finance as Share Price Soars by 12% in 2023
Bajaj Finance: A Stock Worth Considering
In recent times, Bajaj Finance has emerged as a focal point of interest within the financial sphere due to its noteworthy stock price movements. This article delves into the nuances of its performance, shedding light on whether investing in this financial juggernaut is a wise choice.
Bajaj Finance Share Price: A Rollercoaster Ride
Bajaj Finance recently witnessed a marginal 1.07 percent dip in its share price during intraday trading. It commenced at ₹7,383.65, slightly lower than its previous closing rate. The intraday low touched ₹7,304.80 on the BSE.
However, if we step back and take a broader view, Bajaj Finance’s performance is impressive. Its share price has ascended by a substantial 12 percent in 2023 (as of September 6). In comparison, the equity benchmark Sensex has achieved a modest 8 percent growth during the same period. It’s crucial to note that the stock reached its 52-week pinnacle of ₹7,999.90 on July 5 this year, albeit subsequently retracting by nearly 8 percent from that peak.
Analyzing Investment Potential: A Bright Outlook
Is investing in Bajaj Finance a prudent choice? Experts seem to think so. They emphasize the company’s robust fundamentals and its remarkable progress across various domains, primarily through its ‘omnichannel’ strategy.
Bajaj Finance’s ‘omnichannel’ approach aims to provide a seamless experience for customers, facilitating a smooth transition between online and offline channels. This strategy encompasses six key domains:
- Geographic Expansion
- Bajaj Finserv App
- Bajaj Finserv Website
- Payments
- Productivity Apps
- Customer Data Platform (CDP)
Sanjiv Bajaj, Chairman of Bajaj Finance, envisions this omnichannel approach transforming the company into a truly customer-centric digital enterprise. Experts and brokerage firms share this optimism, expecting heightened customer engagement and retention.
For instance, Motilal Oswal Financial Services predicts a substantial 19 percent upside potential in Bajaj Finance stock. They maintain a buy recommendation with a target price of ₹8,800. According to Motilal, the linchpin of the ‘omnichannel’ strategy lies in payment solutions, with the potential to significantly enhance customer engagement on Bajaj Finance’s digital platforms.
Furthermore, Motilal anticipates that Bajaj Finance will accelerate the execution of its omnichannel strategy in FY24, with plans to open 400-450 new locations nationwide. This transformation aims to augment business volumes, elevate customer experiences, optimize costs, and ultimately foster greater customer loyalty and profitability.
The Path Forward: A Digital Transformation
Bajaj Finance aspires to evolve into an ‘omnipresent’ financial services company, spanning physical, app-based, web, social, and virtual channels. The company has made substantial strides in optimizing its processes and technology stack to achieve this vision.
Motilal Oswal underscores the ‘acquire and cross-sell’ approach as a key driver for growth in FY24, encompassing payments, loans, deposits, insurance, and investments. They project a commendable compound annual growth rate (CAGR) of nearly 29 percent in assets under management (AUM) from FY23 to FY25, ensuring a sustainable return on equity (RoE) of 25 percent.
Bajaj Finance not only boasts consistent performance but also possesses the highest return ratios within their coverage universe, second only to gold financiers, as indicated by Motilal Oswal.
Short-Term Challenges: Overcoming Resistance
While Bajaj Finance appears to be an enticing long-term investment, technical analysts pinpoint some critical short-term resistance levels that might hinder its upward trajectory.
Gaurav Bissa, VP of InCred Equities, suggests that although Bajaj Finance has rebounded well after a correction from ₹8,000, it remains within a range. While the stock may ascend to ₹7,500-7,550 in the
near future, substantial obstacles loom around ₹8,000.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, also highlights resistance near the Ichimoku cloud and the upper Bollinger band. On the indicator front, the daily direction movement index and daily RSI suggest signs of exhaustion.
In Conclusion: A Promising Investment Opportunity
In conclusion, Bajaj Finance has showcased remarkable growth and a robust omnichannel strategy. Nevertheless, it’s imperative to acknowledge short-term resistance levels before committing to any investment decisions.
Impressive Financial Performance: A Glimpse into Success
Bajaj Finance recently reported a consolidated net profit of ₹3,437 crore for the first quarter of FY24 (Q1FY24), marking a remarkable 32 percent increase compared to the corresponding quarter of the previous year. The company’s assets under management (AUM) also witnessed substantial growth, surging by 32 percent to ₹270,097 crore as of June 30, 2023, from ₹204,018 crore in the same period last year. Additionally, its Q1FY24 net interest income (NII) surged by 26 percent to ₹8,398 crore on a consolidated basis, compared to ₹6,640 crore in the same quarter of the previous year.
These impressive financial figures solidify Bajaj Finance’s position as a potentially rewarding long-term investment. However, as with any investment, thorough research and a consideration of both short-term and long-term factors are essential before making a decision.