After crumbling from highs, Bajaj Finance claws back. Here's why

As the tenth most valued company in the country, Bajaj Finance has been an evergreen favourite for investors. Indeed, as HDFC and HDFC Bank merged in the future, it will be the sole non-banking lending company in the elite club of India’s biggest firms by market capitalisation.

But the stock came under heavy battering after hitting a high last October along with benchmark indices. The stock tested the high again early this year but has corrected sharply. In fact, the stock had lost nearly a third of its value by June. It has pulled back since then.

After coming up with robust growth in the first quarter the stock has seen further push on Thursday with the share price rising 9.7% in early afternoon trades.

This comes soon after its parent, Bajaj Finserv, announced a plan to go ahead with a stock split and/or a bonus share issue soon, which would provide a more liquidity to the counter. Bajaj Finserv had also seen investors lap up its shares early this week.

Stock on fire

Bajaj Finance could also potentially be a stock split or bonus share candidate with its share price over Rs 7,000 each. But the bulls are likely flocking to the stock after the positive numbers on the earnings front.

The company reported its highest ever consolidated quarterly profit after tax of Rs 2,596 crore in Q1 FY23. Assets under management crossed the milestone of Rs 200,000 crore to stand at Rs 204,018 crore as of June 30, 2022, up 28% over the same period last year.

The firm, which also houses a housing finance arm besides Bajaj Financial Securities, saw net profit rocket 159%. Its new loans booked grew 60% to 7.42 million as against 4.63 million in Q1 FY22.

Customer franchise stood at 60.30 million as of June 30, 2022, compared with 50.45 million a year ago.

Its net interest income increased 48% to Rs 6,638 crore while loan losses and provisions were Rs 755 crore as against Rs 1,750 crore last year.

On the asset quality front, gross NPA and net NPA ratios improved to 1.25% and 0.51%, respectively, compared with 2.96% and 1.46%, as of June 30, 2021.