Bajaj Finserv, Bajaj Finance’s combined market cap hits $100 bln

Shares of Bajaj Finserv hit a record high of Rs17,495.15 on the BSE, pushing its market cap to Rs2.78 trillion, while those of Bajaj Finance touched Rs7,676 apiece, with a market capitalisation at Rs4.63 trillion.

So far this year, Bajaj Finserv and Bajaj Finance have outperformed, gaining 94% and 43%, respectively, compared to a 24% rise in the benchmark Sensex.

This is the fourth conglomerate to have achieved the $100 billion market cap. Tata group’s market capitalisation is at $310.70 billion, while Mukesh Ambani-led Reliance Industries has a market cap of $232 billion. Adani group’s stands at $102.50 bln.

Investors have continued to buy into both the Bajaj group stocks amid improved collections, growth in preferred general insurance segments, new individual life insurance business, after the easing of pandemic-led lockdown restrictions in the country. Analysts the festival season will likely boost improve investor sentiment.

Bajaj Finserv saw a muted performance due to impact of the second wave of the pandemic. The non-banking financial company (NBFC) is expected to recover, analysts believe, as economic activities return to normalcy. It has also undertaken technological initiatives that augurs well for the next stage of growth.

Gross non-performing assets (NPA) and net NPAs stood at 2.96% and 1.46% in first quarter of the current fiscal, up from 1.79% and 0.75%, respectively, in the fourth quarter of FY21. Auto finance business was the worst hit, resulting in worsening of asset quality. Analysts say, in absence of a severe third wave, the company will likely bring down its gross NPA to 1.7-1.8% and net NPA to 0.7-0.8% by 4QFY22E. The second wave resulted in a slight rise in EMI bounce rate in Q1FY22 compared to Q4FY21.

“Strong premium growth and a better product mix will help life and general insurance companies grow and generate higher revenue. Covid related claims continue to be a concern for next few quarters. We expect revenues show a strong rebound from H2FY22E. We have factored a revenue CAGR of 9.6% over FY21-23E and profit CAGR of 36.3% over the same period,” said brokerage KR Choksey in a note to its investors.

Bajaj Finance has received approval from the Reserve Bank of India to launch its digital wallet which will help it foray into the prepaid payment space, joining the likes of Paytm and Amazon. 

“Strong brand presence and wide distribution reach are key pillars for garnering AUM and Bajaj Finance has proved their expertise. Cross-sell to the existing customers of these businesses is a huge opportunity still present in the company. Any significant dip is a good opportunity to buy in this scrip,” said Mohit Nigam, Head – PMS, Hem Securities.