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Why Saurabh Mukherjea is bullish on Bajaj Finance

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Why Saurabh Mukherjea is bullish on Bajaj Finance


Saurabh Mukherjea of Marcellus Investment Managers believes Bajaj Finance is on its way to becoming a digital giant. According to Mukherjea, Bajaj Finance has made the right moves and is expected to continue to do well.

Market veteran Saurabh Mukherjea is bullish on Bajaj Finance, a company he believes is on its way to becoming "a digital giant". The financial technology angle will give the company a new dimension, he told CNBC-TV18. Bajaj Finance has made the right moves and is expected to continue to do well, said Mukherjea, Founder and Chief Investment Officer of Marcellus Investment Managers.

The market guru was referring to the non-banking financial major's decision to foray into prepaid payments, join the likes of Paytm and Amazon. In May, Bajaj Finance received approval from the Reserve Bank of India to launch a digital wallet.
"If you have a business where your credit assessment is superior to the peer group... based on superior written credit analytics and big data, then combining that with a fintech dimension, the wallet that Bajaj is coming up with, we think it's very exciting," said Mukherjea.
The remarks from Mukherjea come at a time when the NBFC's shares have raced past a series of milestones, taking its market capitalisation well past that of the country's largest lender by assets, State Bank of India.
At Tuesday's closing price, Bajaj Finance shares have risen nearly 41 percent so far in 2021.
Currently, Bajaj Finance is the country's eighth-largest company by market value, behind only HDFC Bank, HDFC and ICICI Bank among lenders.
Speaking on Bajaj Finance valuations, Mukherjea said they are not a concern. The latest leg of a rally on Dalal Street has taken the valuations of several large-cap stocks to levels beyond the comfort zone for many.
Mukherjea said he is convinced that there is plenty of more money to be made in Bajaj Financial's lending business. He also said that early work suggests Bajaj Finance’s wallet "could potentially be a triple play on the entirety of e-commerce wallets, buying and selling stuff on the net, and conventional lending. We don't think valuation is the concern here."
The RBI nod comes with perpetual validity, meaning the company will not have to seek clearance from the regulator every year. The foray into digital wallets is part of the financier's broader strategy to expand its digital finance portfolio.
"If you want to be concerned about Bajaj Finance, you need to understand whether they have the execution ability to become a digital giant. Our view is that at the moment, they are streets ahead of anybody else in the NBFC industry in our country,” said Mukherjea, the author of Coffee Can Investing and Unusual Billionaires.
Bajaj Finance shares have given a return of 41 percent, far ahead of the 30-scrip benchmark Sensex's 22 percent.
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