Bajaj Finance stock jumps 3% after quarterly update; what should investors do? Check brokerage views, target prices

Bajaj Finance, a leading NBFC company, witnessed a 31% Year-on-Year (YoY) growth in its core assets under management in the quarter ended June 30, 2022. The company's AUM grew from approximately Rs 156,115 crore in 30 June 2021 to Rs 204,000 crore as of 30 June '22.  

Meanwhile, as Bajaj Finance came up with quarterly update on Tuesday, global brokerages have maintained a mixed stance on the large cap NBFC stock.  

Brokerage firm CLSA has given a 'Sell' call to Bajaj Finance after the quarterly updates were out. It slashed the target from Rs 6,000 to Rs 5,000. As per the brokerage, the growth figures were not at par with its expectations, while valuation is near pre-covid multiples.  

On the contrary, Morgan Stanley retained its 'Overweight' rating with the same target price of Rs 8,000.  

Bajaj Finance share price history  

Meanwhile, shares of Bajaj Finance rose more than three per cent in Wednesday's intraday trade to Rs 5850 per share on the BSE, reacting to the company's June '22 quarter updates.  

The stock is trading at nearly 27% discount on its 52-week high value of Rs 8043, which the counter touched on January 19 this year. The counter traded on 52-week low value of Rs 5,235.60 on 17th June '22.  

Bajaj Finance June 2022 quarter upate highlights 

Apart from 31% year-on-year growth in AMU, below is the highlight of Bajaj Finance business update for the quarter ended June 30, 2022 

* Customer franchise as of 30 June 2022 stood at 60.3 MM as compared to 50.5 MM as of 30 June 2021. The Company recorded highest ever quarterly increase in its customer franchise of 2.7 MM in 01 FY23. 

*New loans booked during 01 FY23 were 7.4 MM as compared to 4.6 MM in 01 FY22. 

*Consolidated net liquidity surplus stood at approximately~ 11.550 crore as of 30 June 2022. The Company's liquidity position remains strong. 

*The Company continues to remain well capitalized with capital adequacy ratio (CRAR) of approximately 26.2% as of 30 June 2022. During the quarter. the Company invested ~ 2,500 crore in equity shares of Bajaj Housing Finance Ltd., a wholly owned subsidiary of the Company. 

*Deposit book stood at approximately~ 34,100 crore as of 30 June 2022 as compared to ~ 27,972 crore as of 30 June 2021. a YoY growth of 22%. 

*The above information with reference to 30 June 2022 is provisional and subject to audit by the statutory auditors of the Company. 

What led to fall in new loans?  

Commenting on the Bajaj Finance update, domestic brokerage Motilal Oswal said new loans booked were perhaps slightly below expectations because of absence of IPO financing. 

"New loans booked rose ~61% YoY at 7.4m on account of the low base due to the second COVID wave. New loans booked stood at 7.4m, ~2% higher than that in 1QFY20, which was the last normal quarter of the fiscal unaffected by the COVID-19 pandemic," it said.