Bajaj Finance, Bajaj Finserv shares price: Bajaj twins gain up to 10% on these triggers - what investors should know?

Financial heavyweights Bajaj Finance and Bajaj Finserv shares spurted up to 10 per cent on the BSE intraday and are also top Nifty50 index gainers, lifting the overall market.  

The surge in Bajaj Finance shares came from strong June quarter earnings and Bajaj Finserv board approving bonus issue in the ratio of 1:1 and stock split in the ratio of 1:5.

Individually, Bajaj Finance share price jumped by 10 per cent to touch the day’s high of Rs 7033.1 per share, while Bajaj Finserv share price gained over 9.5 per cent to touch the day’s high of 14579.95 per share on the BSE intraday.

In comparison, the S&P BSE Sensex is up over 1.7 per cent or 964 points to 56780 levels at around 12:50 PM on Thursday.

Bajaj Finance on Wednesday reported its highest-ever consolidated quarterly net profit at Rs 2,596 crore for the June quarter, helped by robust income against Rs 1,002 crore in the year-ago period and its total income rose 38 per cent to Rs 9,283 crore from Rs 6,743 crore year-on-year (YoY).

Motilal Oswal increase FY23E/FY24E PAT (profit) by 10/4 per cent to factor in higher fee income and lower credit costs. The company should deliver an RoA/RoE of 4.4/22 per cent over the medium term. It reiterates a Buy stance with a target price of Rs 7,320 per share. The brokerage expects the company to be able to deliver a healthy AUM CAGR of around 26 per cent over FY22- FY24.  

Even though the management guided that it would prioritize margins over loan growth, Motilal Oswal believes that NIM compression is likely in FY23 given that levers on borrowing costs have largely played out and has limited ability to pass on the higher funds’ cost on a large fixed-rate book.

With respect to Bajaj Finserv, the company reported strong Q1 earnings on Thursday, as its consolidated net profit surged 57 per cent to Rs 1,309.4 crore as against Rs 833 crore year-on-year (YoY), while revenue up by nearly 14 per cent to Rs 15,888.2 crore versus Rs 13,949.4 crore (YoY).

The company’s board has approved the sub-division of equity shares in 1:5 ratio, which is each share of Bajaj Finserv having a face value of Rs 5 will split into five shares with a face value of Re 1 each.

It has also announced issuance of bonus shares with a face value of Re 1 each for every full paid-up equity share of Re 1. This means that the bonus shares will be issued after the stock split.