Tag: Bajaj Finance

Bajaj Finance shares gain the most in three years after RBI lifts restrictions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Bajaj Finance surged as much as 7.5% on Friday to record their biggest single-day gain since April 2021.

The move comes after the Reserve Bank of India lifted the restrictions imposed on Bajaj Finance’s eCOM and Online digital insta EMI card businesses with immediate effect.

This means that Bajaj Finance can now resume sanctions and disbursals of loans in these two businesses, including the issuance of EMI cards.

Bajaj Finance has received this relief nearly six months after the RBI had restricted the sanctions and disbursals of loans under both these businesses on November 15 and suspended the issuance of EMI cards to new customers on November 17 last year.

Brokerage firm CLSA had calculated the lost revenue from this ban at ₹200 crore per quarter or 4% of Bajaj Finance’s Profit Before Tax, which, according to them now, gets recouped.

CLSA also called this a big positive for investor sentiment, adding that investors can be assured now that Bajaj Finance is not in RBI’s bad books.

“The street’s focus will now go back to fundamentals – loan growth, margins and asset quality,” the brokerage wrote in its note.

CLSA maintained its “buy” recommendation on Bajaj Finance with a price target of ₹9,200.

Out of the 37 analysts that have coverage on Bajaj Finance, 29 of them have a “buy” recommendation, five have a “hold” rating and three have a “sell” call. The 12-month average price target among analysts for Bajaj Finance stands at ₹8,380.

Shares of Bajaj Finance are trading 6.3% higher at ₹7,314.2. With today’s surge, the stock has also turned positive for 2024. Shares of Bajaj Finserv are also trading with gains of 5% at ₹1,693.40.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Big win for Bajaj Finance as RBI lifts restrictions on eCOM and Insta EMI card loans

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Non-banking financial company Bajaj Finance on Thursday (May 2) said the Reserve Bank of India (RBI) has lifted the restrictions imposed on the sanction and disbursal of new loans under the ‘eCOM’ and online/digital Insta EMI card segments.

“Now, we wish to inform that the RBI, vide its letter dated 2 May 2024, based on the remedial actions taken by the Company, has conveyed its decision of lifting the said restrictions on eCOM and online digital ‘Insta EMI Card’, with immediate effect,” according to a stock exchange filing.

This decision comes after the company took remedial actions to address concerns raised by the regulatory authority.

The saga began in November 2023, when Bajaj Finance first announced the RBI’s restrictions on these specific business segments. The central bank had cited concerns, prompting the company to temporarily suspend the issuance of existing member identification cards (EMI cards) to new customers.

This clearance allows the company to resume the sanction and disbursal of loans in the eCOM and online digital Insta EMI card segments, as well as the issuance of EMI cards to customers.

Shares of Bajaj Finance Ltd ended at ₹6,881, down by ₹50.05, or 0.72%, on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bajaj Finance Bulls Vs Bears: Which way will the tide turn?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bajaj Finance reported a 21% year-on-year (YoY) rise in consolidated net profit at ₹3,824.53 crore for the quarter. Its revenue rose 31.34% YoY to ₹14,926.21 crore for the January to March period.

The company’s management in a post-earnings conference call said the non-banking financial company (NBFC) may see a drag on return on equity (ROE) in FY25.

ROE is expected to remain marginally lower than Bajaj Finance’s long-term guidance due to additional capital of ₹9,097 crore raised during the third quarter, the management said. The company has a long-term guidance of 21-23% ROE.

While JPMorgan maintained an ‘overweight’ rating with a target price of ₹8,500, Citi trimmed the price target to ₹8,675 while recommending a ‘buy’ rating. UBS, meanwhile, reiterated its ‘sell’ stance on the stock with a target of ₹6,800.

Global brokerage firm UBS in a note said Bajaj Finance reported in-line numbers in the fourth quarter but credit costs were elevated. The product mix also weakened in the quarter on the RBI embargo and rural B2C segment.

UBS expects FY25 to be a challenging year.

According to Citi, the company has guided for 30-40 basis points moderation in net interest margin (NIM) in the first half of FY25, which assumes the lifting of regulatory restrictions in the near future.

The foreign brokerage has slashed its earnings estimates by 7% for both FY25 and FY26.

JPMorgan expects return on assets (ROAs) to start normalising soon but said that loan growth will remain high.

As per the brokerage, the removal of the digital ban will be a key near-term catalyst.

While Macquarie has maintained a ‘neutral’ recommendation on Bajaj Finance with a target price of ₹8,100 per share, it said the NBFC is moving towards normalised earnings growth.

However, it pointed out that NIMs will remain under pressure; secured segments will drive growth.

Shares of Bajaj Finance ended 0.45% lower at ₹7,296 on Thursday and are up 20% over the last 12 months.

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Bajaj Finance shares may rise another 24% based on these three factors, says Emkay

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Bajaj Finance Ltd. gained nearly a percent on Wednesday after brokerage firm Emkay Global has initiated coverage on the stock with a ‘Buy’ recommendation. Its price target of ₹9,000 implies a potential upside of 24% from the stock’s closing levels on Tuesday.

Bajaj Finance shares have tumbled nearly a percent on a year-to-date basis. Over the last 12 months, the stock has risen 22%. The stock had made a 52-week high of ₹8,190 last year.

Bajaj Finance shares have materially underperformed the benchmark index Nifty 50 over the last two years, amid the Reserve Bank of India (RBI) action on the company, anticipation around management transition and succession, fear of entry of behemoths in consumer financing, and inclusion of Bajaj Housing Finance in the RBI’s upper layer, Emkay noted.

Further, the brokerage said that the recent correction in Bajaj Finance’s valuations provides an attractive entry point for investors.

“With resolutions for most of these issues likely within the next one year, the correction in Bajaj Finance’s shares provides an attractive entry point, given that the execution machine of the company is as effective as ever and that it is well on track to deliver its ‘Long Range Strategy’ targets (i.e. superior growth and profitability with regard to financial services),” it said.

According to Emkay, its positive stance on the stock is underpinned by three factors—

i) Flawless execution of strategic plans being Bajaj Finance’s biggest strength; its execution capabilities are as strong as ever.

ii) Near-term challenges and concerns — such as RBI actions on EMI and E-com cards, Management succession and transition plans, and listing of the housing subsidiary — have already been identified, and a resolution for each is likely within the next one year.

iii) Continuing with its immaculate 3i execution strategy (Invent, Innovate and Imitate), the company is well poised to deliver consolidated asset under management (AUM) CAGR of 25% and consolidated profit after tax (PAT) CAGR of 21.4%, over FY24 to FY27 estimates.

Key risks, as per the brokerage, include new regulatory actions or prolonged duration of existing regulatory actions; transition to a bank structure; extreme increase in competitive intensity in key segments.

Out of the 38 analysts that have coverage on Bajaj Finance, 31 of them have a ‘Buy’ recommendation, four have a ‘Hold’ call while three have a ‘Sell’ rating.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

These two lenders have hiked fixed deposit rates in April: Should you invest in FDs now?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Two non-banking financial companies (NBFCs) have recently raised their fixed deposit (FD) interest rates. While Shriram Finance has hiked rates by 0.05% to 0.20% on various maturity tenures, Bajaj Finance has increased FD rates for senior citizens by up to 60 basis points in the 25-to-35-month tenure and 40 basis points in the 18-to-24-month tenure.

In the case of Shriram Finance, the revised rates have come into effect from April 9, 2024.

On the other hand, Bajaj Finance’s latest FD rates are effective from April 3, 2024.

Let’s delve into the details of these rate revisions and whether now is the opportune time to invest in FDs:

Shriram Finance

For non-cumulative fixed deposits, Shriram Finance currently offers interest rates ranging from 7.85% to 8.80% per annum for terms spanning 12 to 60 months.

A non-cumulative fixed deposit (FD) is a type of FD where the interest earned on the principal amount is paid out at regular intervals, such as monthly, quarterly, half-yearly, or annually, depending on the terms of the FD.

Here are the interest rates offered by Shriram Finance on non-cumulative fixed deposits:

(Source: Shriram Finance)

On the other hand, the effective yield on cumulative fixed deposits is between 7.85% to 10.50% per annum for the same tenure range.

In cumulative FDs, the interest is compounded and paid out along with the principal amount at maturity.

Here are the interest rates offered by Shriram Finance on cumulative fixed deposits:

(Source: Shriram Finance)

Bajaj Finance

Here are the latest FD rates offered by Bajaj Finance on deposits up to ₹5 crore:

Special period – Valid for deposits up to ₹5 crore

Regular period – Valid for deposits up to ₹5 crore

In light of these developments, the question arises: Is now the right time to invest in FDs?

It must be noted that the Reserve Bank of India (RBI) has left the repo rate unchanged for the seventh consecutive time, signalling stability in interest rates.

Adhil Shetty, CEO of Bankbazaar.com, said stable interest rates bode well for FD investors, especially those seeking predictable income streams and capital preservation.

While the repo rate pause implies stability for FD rates, some banks and NBFCs continue to raise rates, leveraging the transmission window left by previous hikes.

Therefore, investors may find themselves in a favourable position to secure attractive returns on their investments.

However, one widely accepted principle is to limit FD investments to the extent covered by Deposit Insurance and Credit Guarantee Corporation (DICGC) in India.

This insurance typically covers deposits up to ₹5 lakh, safeguarding investors’ funds in the event of a bank or NBFC failure.

By adhering to this principle, investors mitigate the risk associated with individual lenders and ensure that their savings remain protected.

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Bajaj Finance reports 4% growth in new loans despite regulatory constraints in Q4

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Leading retail-focused shadow bank Bajaj Finance Ltd on Thursday (April 4) released its business update for the quarter ended March 31, 2024, showcasing growth in various key metrics despite regulatory challenges.

According to the update, the company’s customer franchise witnessed significant expansion, reaching 83.64 million as of March 31, 2024, compared to 69.14 million in the previous year. This represents an increase of 3.23 million customers during Q4 FY24.

Despite facing restrictions imposed by the Reserve Bank of India (RBI) on certain loan products, Bajaj Finance managed to book new loans totalling 7.87 million during Q4 FY24, reflecting a 4% growth compared to the same period last year. However, the new loans booked were lower by 0.80 million due to the aforementioned regulatory constraints.

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“New loans booked during Q4 FY24 grew by 4% to 7.87 MM as compared to 7.56 MM in Q4 FY23. The new loans booked during the quarter were lower by 0.80 MM on account of the restrictions placed by the RBI on the Company, on sanction and disbursal of loans under eCOM and Insta EMI Card,” Bajaj Finance said.

One of the standout achievements for Bajaj Finance was the robust growth in Assets Under Management (AUM), which surged by 34% to approximately ₹330,400 crore as of March 31, 2024, compared to ₹247,379 crore in the previous year. The company reported a growth of approximately ₹19,400 crore in AUM during Q4 FY24.

The company’s liquidity position remains strong, with a consolidated net liquidity surplus of approximately ₹15,700 crore as of March 31, 2024. Additionally, Bajaj Finance witnessed significant growth in its deposits book, which stood at approximately ₹60,100 crore as of March 31, 2024, marking a year-on-year growth of 35% compared to ₹44,666 crore in the previous year.

Also Read: Bajaj Finance Q2 results: Net profit rises 28%, net interest income grows 26%

Shares of Bajaj Finance Ltd ended at ₹7,287.00, down by ₹21.20, or 0.29% on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bajaj Finance arm Bajaj Housing Finance starts preparation for IPO targeting $9-10 billion valuation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bajaj Housing Finance, a unit of Bajaj Finance Ltd, has initiated preliminary talks with several investment banks about a potential initial public offering at a valuation of around $9 billion to $10 billion to comply with regulatory norms, three people familiar with the development said.

The move is in line with RBI’s mandatory requirement for “upper layer” NBFCs to list within three years of being notified. These are early days, and the firm is planning to raise $900 million to a billion dollars via the proposed IPO, keeping the minimum dilution and expected valuation range in mind,” according to one of the people cited above.

The first person added that no final decision had been made and that the quantum and plans may change depending on market conditions.

Bajaj Housing Finance has to list by September 2025 under the current regulatory timeline laid out by the Reserve Bank of India.

A second person cited above said that Bajaj Housing Finance had held early negotiations with a group of select domestic and foreign investment banks regarding the proposed listing.

“A syndicate of investment bankers will be chosen soon from this pool, and the deal is likely to be kicked off in the coming weeks, with the first IPO from the reputed Bajaj Group in several years,” this person said.

All three spoke to Moneycontrol on the condition of anonymity.

A third person familiar with the plans of Bajaj Housing Finance said that the IPO is likely to be a combination of primary and secondary issue of shares.

Email queries sent to Bajaj Finance and Bajaj Housing Finance were left unanswered at the time of publishing this article despite multiple reminders. This article will be updated as soon as we hear from the firms.

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The regulatory regime for upper-layer NBFCs

On September 30, 2022, the RBI announced the list of 16 NBFCs in the Upper Layer under Scale Based Regulation for NBFCs. The framework categorised NBFCs in Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL). It specified that Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank based on a set of parameters and scoring methodology.

Apart from Bajaj Housing Finance, the Upper Layer list also included Tata Sons, HDB Financial Services, Tata Capital Financial Services, Aditya Birla Finance and Shanghvi Finance.

Earlier this month, listed parent Aditya Birla Capital announced that it would merge its arm, Aditya Birla Finance, with itself.

In February 2024, Aadhar Housing Finance, backed by private equity major Blackstone, refiled its draft initial share sale documents with the markets regulator, the Securities and Exchange Board of India, as the affordable home financier aims to raise as much as Rs 5,000 crore this year.

Earlier in December, private equity firm Westbridge-backed housing finance firm India Shelter Finance launched a Rs 1,200 crore IPO and made its public market debut.

A look at Bajaj Housing Finance

Bajaj Housing Finance is a diversified NBFC catering to more than 76.5 million customers across the country, according to its website. Based in Pune, Bajaj Housing Finance Limited offers finance to individuals as well as corporate entities for the purchase and renovation of homes or commercial spaces.

It also provides loans against property for business or personal needs as well as working capital for business expansion purposes. The company also offers finance to developers engaged in the construction of residential and commercial properties, as well as lease rental discounts for developers and high-net-worth individuals.

For the nine months ended December 31, Bajaj Housing Finance had assets under management of Rs 85,929 crore, a 31 percent increase over the year earlier. Disbursements also rose by 31 percent to Rs 25,308 crore, while net profit increased by 41 percent to Rs 1,350 crore.

On March 27, the Bajaj Finance stock, which has perked up 8.16 percent in the past month, closed at Rs 7,029 on the National Stock Exchange, up 1.7 percent from the previous close. Bajaj Finance parent Bajaj Finserv ended the day at Rs 1,585, down 0.56 percent from March 26 close. For the month, too, the stock has remained flattish.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow