InvestorQ : What is your call on Bajaj Finance? Is it a good stock in the recovery, or do you think it is overpriced at current levels?
Priyanka N made post

What is your call on Bajaj Finance? Is it a good stock in the recovery, or do you think it is overpriced at current levels?

Answer
image
Neelam Naik answered.
5 months ago
Follow

Bajaj Finance has been one of the finest performers in the stock markets in the last few months as its core lending business has picked up despite concerns over the impact of the moratorium. In the Dec-20 quarter, Bajaj Finance added 22 lakh new customers. It also added 60 lakh new loans during the Dec-20 quarter; back at pre-COVID levels

One can argue that the improvement in performance in Dec-20 quarter comes from the festive season and that is largely correct. Apparently, this recovery has been led by retail personal loans as EMI schemes are back in currency. However, analysts are pushing the stock not only for the festive season story but also for potential growth in coming quarters.

The bigger story is that Bajaj Finance’s liquidity position has also eased and it is getting funding at lower rates. That would mean lower cost of funds and therefore larger spreads for the financer. It not only remains the largest player in the personal loans space but also the most profitable in the space with the lowest asset quality risk.

A key question mark could be over likely delinquencies once the moratorium is lifted. For now; economy is reviving and asset quality is likely to see lesser damage than expected. This could goad the management to pursue growth more aggressively in the coming quarters.
3 Views