Bajaj Finance dips in trade as Street cautious over consumer finance firm’s Q2 loan growth

Bajaj Finance share price closed 1 percent on Thursday as the Street turned cautious over the loan growth of the consumer finance firm in the July-September quarter. The bearish sentiment in Bajaj Finance stock price came as the non-banking financial company (NBFC) released its second quarter business update.

Bajaj Finance disbursed 68 lakh loans in the September 2022 quarter, compared to 63 lakh disbursed in the same quarter a year ago.

CHART HERE SHOWING LOAN GROWTH OF THE LAST 4 QUARTERS

Bajaj Finance’s deposit growth saw a jump of 37 percent to Rs 39,400 crore, compared to Rs 28,720 crore in a year ago period.

CHART HERE GIVING THE NUMBERS ABOVE

Bajaj Finance’s liquidity position remained strong during the second quarter OR the quarter under consideration.

Global brokerage CLSA has maintained a sell rating on the stock with a target price of Rs 5,600. It said, “If the company has a growth on a large size, then it will come down only when inflation softens. On the other hand, if it is due to mortgage, then the return on equity (ROE) should be low.”

Macquarie has an 'Underperform' rating on Bajaj Finance with a target price of Rs 5,000.

“The loan volume is still flat as compared to FY20,” adding that it “will play a big role in growth”.

The Bank of America (BoFA) Securities has a ‘buy’ stance on the stock with a target price of Rs 8,345 as it expects the NBFC to post a strong growth. BofA sees a 31 per cent year-on-year jump in AUM, which will boost growth.

Maintaining an overweight stance on Bajaj Finance, Morgan Stanley has set a target price of Rs 8,500 per share saying the consumer finance firm’s position in deposits is strong.

“Customer franchises grew 4 per cent on a quarterly basis and 19 per cent year-on-year to 62.9 million,” Morgan Stanley said in the report.

A multi-bagger stock, Bajaj Finance has given investors stellar returns over the years, rising 285 percent in 5 years. Year-to-date, Bajaj Finance share price has over 2.5 percent.