Brokerage firm Jefferies India expects Bajaj Finance to sustain its premium valuations to peers because of its superior earnings growth profile.
The brokerage firm has initiated coverage on Bajaj Finance with a “hold” rating, saying the company's stock is perfectly priced. It has assigned a price target of Rs 7,200 on the stock with a 12-month horizon, implying gains of 17 percent.
Shares of Bajaj Finance have fallen 11 percent, so far, this year amid wider sell-off in domestic equities triggered by the Russia-Ukraine war and prospects of interest rate hike by the US Federal Reserve.
Besides the broader market sell-off, shares of the company have become vulnerable to a sharp contraction in price-to-earnings ratio due to apprehensions of over growth.
Jefferies said Bajaj Finance's current valuation of 37 times one-year forward earnings and 7.7 times price-to-book value is not only at a significant premium to peers but also sharply above the stock's long-term average.
"We see limited scope for further re-rating in the stock," Jefferies said.
At 9:55 am, shares of Bajaj Finance were trading 4.7 percent lower at Rs 6,232.90 on the National Stock Exchange.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
