Bajaj Finance investors money turns 5 times in 5 yrs. Should you buy or hold?


Bajaj twins – Bajaj Finance and Bajaj Finserv have witnessed a stellar rally in the recent bull markets on long term positive outlook and improving prospects. Bajaj Finserv shares have given multibagger returns in 2021 so far as it is up more than 100% this year (year-to-date) whereas Bajaj Finance has gained nearly 50% during the same period.

Bajaj Finance’s share price has grown by around 7.2 x over the past five years, from around 1,100 levels in September 2016 to around 7800 levels in September 2021. On the other hand, Bajaj Finserv’s share price has grown by around 6 times over the past five years i.e., from 2,900 in September 2016 to hovering around 18,000 per share currently.

ICICI Securities has maintained its ‘Buy’ rating on Bajaj Finance stock. “We remain positive and factoring in high NIMs with risk adjusted growth we value the stock at ~10x P/ABV on FY23E and revise our target price to 8950 from 6900 earlier. Premium valuations stay,” the brokerage note on Bajaj Finance stated. 

Meanwhile, it has upgraded its rating on Bajaj Finserv stock from Hold to ‘Buy’ and raised target price to 20,200 per share from 13,500 earlier. It sees robust premium growth & selective product mix to aid business growth & earnings in life & general insurance business as key triggers for future price performance.

Bajaj Finance is a dominant player in the consumer finance space while it also has made a foray into various other lending segments like housing, SME lending, etc, as and when opportunities have come in. The transition towards fin-tech from being a pure lender to propel valuations and a leaner operating model and robust growth guidance to act as key triggers, as per ICICI Securities.

Bajaj Finserv is a financial conglomerate with a holding in the financing business (Bajaj Finance), life insurance (Bajaj Life Insurance) and general insurance (Bajaj General Insurance) business. The brokerage said that its consistent, faster business growth and profitability remains in focus.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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