Bajaj Finance has been a consistent outperformer, returning over 60 percent in 2019, making it the top gainer on equity benchmarks - Nifty and Sensex. In comparison, Nifty rose 13 percent in 2019 and Sensex added 15 percent.
In the last 4 years, the stock has surged over 40 percent every year. It rallied 51 percent in 2018, 109 percent in 2017, 40 percent in 2016 and 72 percent in 2015.
The stellar performance has been on the back of double-digit growth in earnings, assets and net interest income. Analysts expect a similar performance to continue in the coming year as well, despite woes in the NBFC sector.
The stock has outperformed most of its peers for the year. Only HDFC AMC has given better return than Bajaj Finance in 2019. HDFC AMC share rose 62 percent. Other peers including Bajaj Finserv, HDFC, Cholamandalam Investments, ICICI Prudential, and REC rose between 15 percent and 50 percent for the year.
Despite a challenging environment, it reported a whopping 63 percent year-on-year (YoY) rise in profit in Q2 at Rs 1,506.3 crore, beating analysts' expectations. In Q2FY19, the company had reported a profit of Rs 923.5 crore.
Net interest income increased 48 percent YoY to Rs 3,999 crore in Q2, with assets under management growth of 38 percent at Rs 1.35 lakh crore YoY. The non-banking finance company said that new loans increased 23 percent YoY to 6.47 million in the September quarter.
As of September 30, 2019, assets under management (AUM) grew by 38 percent to Rs 135,533 crore from Rs 98,013 crore in the same quarter last year. Customer franchise increased by 29 percent to Rs 3.87 crore from Rs 3 crore as of September 30, 2018.
With more than 20 percent holdings by foreign institutional investors (FIIs) and over 7 percent holding of domestic mutual funds, the company is still a preferred stock.
“Bajaj Finance (BAF) has a strong risk management framework with a large client base and best practices in terms of measures in keeping strong asset quality confidence. In a declining interest-rate regime, BAF has strong pricing power and is better placed to tap growth,” JM Financial said.
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