Bajaj Finance on February 15 briefly overtook Housing Development Finance Corporation (HDFC) as the biggest non-banking finance company (NBFC) in India by market capitalisation.
Bajaj Finance’s market capitalisation reached Rs 4,17, 385 crore to beat HDFC’s Rs 4,17,076.
This comes as shares of HDFC have been in a downward spiral for some time as they trade near their 52-week low. The stock has fallen 19 percent in the past year and is the second worst performing stock on the Nifty 50 index after Hero MotoCorp.
Analysts have pointed to continued pressure on margins due to rising competition in the housing finance segment as one of the reasons for subdued investor interest. Brokerage firm CLSA India in a recent report maintained ‘outperform’ rating on the stock as it expects the company to benefit from an upturn in domestic interest rates and as valuations are undemanding.
The company is also suffering from underperformance of listed subsidiaries all of whom have given negative returns in the past 12 months. Shares of HDFC Bank, HDFC Life Insurance, and HDFC Asset Management Company have slumped 7-27 percent in the past year.
At the same time, Bajaj Finance is drawing strength from optimism among both investors and analysts due to its recent pivot from traditional lending to fintech solutions. While shares have fallen more than 15 percent from their record high hit recently due to ongoing market correction in fintech stocks, analysts overall have maintained a favourable view of the company.
“Valuation is not cheap – but business and earnings momentum with improving economy and technological initiatives imply that the stock will keep doing well,” brokerage firm Morgan Stanley India said in a note last month.
Shares of Bajaj Finance have risen 20 percent in the past even after accounting for the recent 15 percent correction.
At 1:30 pm, shares of Bajaj Finance were up 1.9 percent at Rs 6.920.7 on the BSE with a market value of Rs 4.17 lakh crore, while those of HDFC were up 0.9 percent at Rs 2,318.7 with a market capitalisation of Rs 4.2 lakh crore. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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