On a day when the market was generally sluggish, the share price of Bajaj Finance stock increased by almost 4% in the morning session on the BSE after the business announced that its board of directors would meet next week to discuss raising money. The stock climbed more than 4% to record the intraday high of $7,780 in today’s session from its opening price of $7,594.95 versus the previous close of $7,472.50.
“The board of directors of Bajaj Finance will meet on Thursday, October 5, 2023, to discuss the proposal for raising funds through any or all of the various methods, including by way of preferential issue, qualified institutions placement, subject to such regulatory and statutory approvals as may be required, including approval of the company’s shareholders,” Bajaj Finance stated in an exchange filing post-market hours on Friday.
In the previous 12 months, the share price of benchmark Sensex has outperformed Bajaj Finance. In comparison to the Sensex, which had a rise of over 15% during the same time period, the stock’s recent year-over-year growth has been just approximately 7%.
The share price of Bajaj Finance reached a 52-week high of 7,999.90 on July 5 of this year and a 52-week low of 5,487.25 on March 20 of this year on the BSE.
Optimistic experts on the stock
Long-term prospects for the Bajaj Finance stock are favorable according to several experts and brokerage houses.
After the business disclosed its intention to raise further money, brokerage firm Motilal Oswal Financial Services predicted that the stock would increase even more.
“While we still don’t know all the specifics of Jio Financial’s strategy, we do know that it intends to start off by lending to consumers and businesses. According to certain channel checks, Jio Financial has already begun consumer loan pilots at Reliance-owned outlets that provide consumer goods and leisure items.
With a target price of 8,800, the brokerage company has a buy call on the stock, indicating a potential 18% gain.
The ‘omnichannel’ transformation and Bajaj Finance’s digital ecosystem, according to Motilal, would give the company solid levers for raising its fee income in addition to giving it the capacity to accelerate client acquisition and disbursement momentum.
Management’s long-term RoE (return on equity) projection is 21 to 23%, although, with the present level of leverage, it potentially reaches
RoE of 24-25%. Attempting to bring the RoE within the suggested levels may also be the purpose of this capital increase. For a sustainable RoE of 25%, we predict an AUM (assets under management) CAGR of almost 29% during FY23-FY25E, according to Motilal Oswal.
According to CNBC-TV18, Jefferies is one of the international brokerage companies that has a buy call on Bajaj Finance with a target price of 8,830.
The offering amount may be about 8,000 crore if Bajaj Finance raises 10–15 percent of net value. As a result, there would be a 2% dilution, although EPS and BVPS may increase by 6% and 11%, respectively, in FY24. RoE may witness a small decline to 22%, according to Jefferies, as quoted by CNBC-TV18.
According to CNBC-TV18, CLSA also has a buy call with a target price of 9,500 on the Bajaj Finance shares.
Technical analysis of shares of Bajaj Finance
Long-term technical analysts are likewise bullish on the company, but they draw attention to the firm’s near-term resistance and advise taking a profit now.
Anand Rathi Share and Stock Brokers’ Jigar S. Patel, Senior Manager of Equity Research, said that the price of the Bajaj Finance share rose from 6,800 to 7,600.
As we move up, he continued, there are a few overhead resistances seen at 7,750, followed by the 8,000 mark. In terms of support, levels around 7,500 and 7,400 are reliable levels.
If previously purchased, Patel advised, “booking profits close to the resistance zone and waiting for a dip to 7,400 before adding additional long positions.”
