Bajaj Finance share price has been in a strong bull run in the past decades, making it one of the best-performing Indian stocks. It jumped to a record high of ₹975 this month, up by almost 300% in the last five years and 37.5% this year.
Bajaj Finance growth is continuing
Bajaj Finance stock price is in the spotlight this week after the company executed its stock split. A stock split reduces its price and increases the outstanding shares, making it more affordable to investors.
The stock split came as the company, which is mainly owned by Bajaj Finserv, continued growing. It was also accompanied by a bonus and a special dividend because of the exceptional gain from the sale of investment in Bajaj Housing Finance (BHFL).
Its most recent results showed that its customers surged to over 101.8 million, while its assets under management jumped by 26% to over $47 billion. Its profit before tax (PBT) rose by 11% to $649 million, while profit after tax soared by 19% to $523 million.
Bajaj Finance’s new loans jumped to 10.70 million, up from 7.87 million, a 36% surge. This happened as the company added 4.70 million customers during the quarter.
Most notably, the company’s net interest income soared by 22% to $1.127 billion, while net income grew by 23%.
These numbers make it one of the fastest-growing financial services companies in India. It is growing faster than banks like ICICI, HDFC Bank, State Bank of India (SBI), Punjab National Bank, and Axis Bank.
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Valuation concerns remain
A key challenge, however, is that the company is highly overvalued than other firms. Its price-to-earnings (PE) stands at 35, a 27% premium to its peers, while its price-to-book (PB) to 6, a 247% premium to its peers.
The company has a price-to-sales ratio of 7.97, which is also higher than other companies. In contrast, a bank like ICICI has a price-to-earnings ratio of 20, while the price-to-book is 3.35.
Proponents argue that Bajaj Finance should have a higher valuation multiple than banks because of its faster growth and the fact that it does not operate under strict capital requirements.
Analysts are largely optimistic about the Bajaj Finance share price. YES Securities recently upgraded the stock, citing robust growth and the potential for rerating. Similarly, Motil Oswal and Nirmal Bang boosted their forecast, citing customer acquisition and strong adjusted book value.
Bajaj Finance share price analysis
Bajaj Finance stock chart | Source: TradingView
The weekly chart shows that the Bajaj Finance stock price has been in a strong bull run in the past few years.
Its stock jumped from a low of ₹176.50 in 2020 to a high of ₹977.20. The stock has moved above the important resistance at ₹790, the highest swing in October 2021, January 2022, and October 2023.
The shares surged above the ascending triangle pattern, a popular bullish continuation signal. They remain above the 50-week and 100-week Exponential Moving Averages (EMA).
Further, the Relative Strength Index (RSI) and the MACD indicators have moderated in the past few weeks. That is a sign that the stock is forming a bearish divergence pattern.
Therefore, the stock will likely retreat and retest the support at ₹790, the upper side of the ascending triangle. This is known as a break-and-retest, which is a common continuation sign. The retreat will happen as the hype surrounding the stock split eases, and then will be followed by a surge to ₹1,000.
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