Bajaj Finance board to meet on October 5 to consider raising funds; shares zoom

Bajaj Finance shares jumped on Monday after the non-banking financial company (NBFC) said its board will meet on October 5 to consider raising funds through various means including preferential issuance of shares and qualified institutional placement (QIP). The Bajaj Finance stock gained by Rs 264.5, or 3.5 per cent, to touch Rs 7,737 apiece at the strongest level of the day so far. 

The NBFC stock traded in high volume. At 9:35 am, the stock was holding on to a gain of 3.4 per cent at Rs 7,727.3 apiece on the bourse. As many as 26,000 Bajaj Finance shares changed hands for the day on BSE, as against a daily average of 16,000 in the past two weeks, according to exchange data. 

In a regulatory filing post-market hours on Friday, Bajaj Finance said the raising of funds will be subject to regulatory as well as shareholders' approvals. It also said the trading window for dealing in its shares will be closed from September 22 till October 7 (both days inclusive).

Should you buy, sell or hold Bajaj Finance or Bajaj Finserv shares?

Brokerage CLSA maintained a 'buy' rating on Bajaj Finance and raised its target for the stock by Rs 500 to Rs 9,500 after the news. The move to raise capital comes after a gap of four years in a sign of stronger-than-expected medium-term loan growth and will help the company drive its long-term growth, highlighted CLSA, whose target implies an upside of 27 per cent from Friday's closing price. 

The brokerage increased its loan growth estimate for the non-banking financial company for the next two years by 2-3 percentage points. 

Here's how different brokerages make of Bajaj Finance:

Analysts at Jefferies pointed out that the issue size may be Rs 8,000 crore or $1 billion assuming that Bajaj Finance raises 10-15 per cent of its net worth. 

Such a fund-raise would lead to a dilution of two per cent and an estimated six per cent increase in its estimated earnings per share (EPS) for the year ending March 2024, according to the brokerage.

Meanwhile, Himanshu Gupta, VP-Research at Globe Capital Markets, told Zee Business he remains positive about the Bajaj twins (Bajaj Finance and its parent, Bajaj Finserv).

He suggests going long on Bajaj Finserv in the futures market for targets of Rs 1,605 and Rs 1,610, suggesting an upside of up to 4.4 per cent in the stock from its previous close. 

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