Bajaj Finance shares price soars nearly 5%, market cap now over 3 lk cr

Share price of Bajaj Finance soared over 5% and marched into the Rs 3 lkh crore space. Notably, Reliance Industries is India's most valued firm with market cap over Rs 12.5 lk cr followed by TCS and HDFC Bank with market cap of over Rs 10 lk cr and Rs 7.5 lk cr.  

Significantly, Bajaj Finance shares made 52 week low of Rs 1783 in the month of May, 2021 and has almost multiplied thrice from lows. This consumer finance lending giant is the leader in its space and is way ahead of competitors. The stock has witnessed strong rally as lockdown measures were being eased in the country. Bajaj Finance has strong operational model and exceptional management to drive the growth engine of the company on the upside.  

Consolidated PBT of Bajaj Finance for Q2 contracted by 35% to Rs 1305 cr after taking additional provisions for stage 1 and 2 of Rs 1370 cr, cost of additional liquidity of Rs 173 cr and interest income reversal of Rs 142 cr. The Company has strong pre provisioning profitability. GNPA and NNPA for the quarter stood at 1.03% & 0.37% respectively. Adjusted GNPA and NNPA stood at 1.34% and 0.56% respectively.  
Bajaj Finance has significantly accelerated its 3rd transformation journey. The Company is in the middle of significantly strengthening its technology, data science, app design and content design teams. The Company is working towards delivering a transformed customer experience model for it 105 mn customers and prospects by June-July 21. 30. Once implemented, this transformation should lead to significantly higher velocity at much lower cost. 

As of September 2020, Bajaj Finance is holding its credit costs estimate at Rs 6000 – Rs 6300 cr for FY21 in addition to 1150 Cr (900 Cr of COVID-19 provision & 250 Cr of estimated write off recovery) provisioned in Q4 FY20. Our loan loss models are currently projecting an improvement to this estimate. Bajaj Finance continues to roll forward its loan loss forecast every month by each of its portfolio. 

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For the past one week, Nifty has been consolidating between the 13400-13600 band. Today, the index has slipped below the midpoint of this band, primarily weighted by weakness among banking, FMCG, and energy stocks. Most of the sectoral indices are showing signs of fatigue following strong price gains over the past several weeks. While the overall trajectory continues to be bullish, a minor, short-term correction seems overdue before the next up-leg commences. 
  
For the next 4-5 sessions, 13400 is an important support to keep an eye on. If this support level breaks, participants could see a much-needed correction in the index towards 13000-12900 zone.