Bajaj Finance shares jumped as much as 3.3 percent to Rs 5,850 on BSE on Wednesday after the private sector financier reported a 61 percent year-on-year jump in new loans boosted by robust customer addition.
However, the Street is divided on whether a one-fifth year-on-year increase in its customer base will aid the pace of growth going forward.
Brokerage firm CLSA said Bajaj Finance's valuation is largely back to pre-COVID multiples due to the change in the micro as well as macro environment, and suggested switching to large banking stocks.
|Brokerage||Rating||Target price ||TP vs Tuesday's closing price|
|Morgan Stanley||Overweight||Rs 8,000||41.3%|
Bajaj Finance's new loans increased 61 percent on a year-on-year basis to 74 lakh in the April-June period, according to a business update by the company released post-market hours on Tuesday. Deposits increased 22 percent to Rs 34,100 crore.
Bajaj Finance's customer base increased 19.4 percent on year to 6.03 crore — its highest ever quarterly increase, according to the filing.
Growth in its core assets under management (AUM) — excluding its short-tenor IPO financing book — stood Rs 2.04 lakh crore in the three-month period.
Bajaj Finance said its liquidity position continues to be strong, with its consolidated net liquidity surplus at Rs 11,550 crore as of June 30.
According to Bernstein, Bajaj Finance delivered a healthy performance driven by strong growth in its balance sheet, but flagged details about its digital transformation journey and asset quality as key monitorables.
CLSA brought down its target price for Bajaj Finance by 16.7 percent to Rs 5,000 citing a slower pace of growth compared to pre-pandemic levels. The brokerage's target implies a downside of 11.7 percent from Tuesday's closing price.
Bajaj Finance used to clock sequential growth of more than 10 percent in the April-June period, a seasonally strong quarter for the company, according to CLSA.
"This performance is in sync with our thesis that AUM growth will sustainably slow down given Bajaj Finance's large customer base and lower customer repeat purchase ratio," the brokerage said.
CLSA trimmed its estimates for Bajaj Finance by two percent citing lower spreads.