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Last Updated : Jun 23, 2020 02:52 PM IST | Source: Moneycontrol.com

Bajaj Finance overtakes SBI in market value again, HSBC still expects 30% upside

The NBFC major has gained 712 percent since the start of 2016, to hit an all-time closing high of Rs 4,880 on February 20, 2020.

Sunil Shankar Matkar
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Todays L/H

NBFC major Bajaj Finance, which has been a strong performer in last three years, overtook State Bank of India in market value again on June 22.

On June 23, these stocks gained 3.7 percent and 2.5 percent, respectively, intraday.

Bajaj Finance traded at Rs 2,887.80, up 1.62 percent with a market capitalisation of Rs 1,73,755.77 crore on the BSE at 11:00 hours IST.


At the same time, the country's largest lender State Bank of India quoted at Rs 190.90, up 1.68 percent with a market cap of Rs 1,70,460.08 crore.

In the list of top 100 companies in terms of market capitalisation, Bajaj Finance was at the 12th slot following Reliance Industries, TCS, HDFC Bank, HUL, Bharti Airtel, HDFC, Infosys, Kotak Mahindra Bank, ICICI Bank, ITC and Maruti Suzuki. SBI was at the 13th slot.

The NBFC major gained 712 percent since the start of 2016, and hit an all-time closing high of Rs 4,880 on February 20, 2020.

The stock gained 40 percent in 2016, 109 percent in 2017, 51 percent in 2018 and 60 percent in 2019, though it corrected 33 percent in 2020, year-to-date largely due to nationwide lockdown to control the spread of virus which raised concerns over likely NPAs after moratorium.


In comparison, since the start of 2016 till February 20, 2020, SBI gained only 46 percent. Year-to-date in 2020, SBI is down 44 percent, there also Bajaj Finance outperformed.

HSBC in its May note said it had a buy call on Bajaj Finance with a target of Rs 3,700, which still implies 30 percent upside potential.

"COVID-19 may drive a marked change in spending patterns. We may see 'in-house' spending being favoured versus 'out-of-home' spending," said the global brokerage.

"Financing needs are set to rise as consumers and companies push for no-cost EMI, while the growth moderation may be less in medium term than feared by market," it added.

Geojit Financial Services has upgraded the stock to buy today, saying recording strong topline performance in Q4FY20 it believes that the heavy provisioning will give enough buffer in this challenging environment amidst COVID-19, eventually allowing the company to bounce back.

Bajaj finance's assets under management (AUM) grew by 27 percent YoY to Rs 1,47,153 crore in Q4FY20. As of April 30th, 27 percent of the consolidated AUM was under moratorium.

Net interest income during the quarter rose 38.4 percent YoY to Rs 4,679 crore in 4QFY20. However, profit fell 19.4 percent YoY due to high provisioning (+377.4 percent YoY) including COVID-19 provision. Excluding COVID-19 provisioning, adjusted PAT rose 37.9 percent YoY.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Jun 23, 2020 02:52 pm