Mehabe score: 5 G Factor: 4 Piotski Score: 3 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 3.
Description
Bajaj Finance is mainly engaged in the business of lending. BFL has a diversified lending portfolio across retail, SME and commercial customers with a significant presence in urban and rural India. It also accepts public and corporate deposits and offers variety of financial services products to its customers.(Source : 202003 Annual Report Page No:124)
Main Points
Largest NBFC in India
Bajaj Finance (BFL) started its journey in the year 1987 as a vehicle financing company and now is one of the largest NBFC in India. It has more than 1,47,100 Cr of Assets under Management (AUM) #. BFL has a diversified lending portfolio and has its presence in various lending segments.Site:BAJFINANCEMain Symbol:BAJFINANCE
Stock trades at 6015.0, above its 50dma 5887.94. It also trades above its 200dma 5113.17. The stock remains bullish on techicals
The 52 week high is at 6342.80 and the 52week low is at 3006.90
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 28.18% CAGR over last 5 years
Weakness
– Stock is trading at 9.83 times its book value
– has low interest coverage ratio.
Competition
– The industry trades at a mean P/E of 26.0x. SBI Cards trades at the industry’s max P/E of 92.97x. BAJFINANCE trades at a P/E of 82.1x
– Industry’s mean G-Factor is 4.3 while the mean Piotski score is 6.0. BAJFINANCE has a G-Factor of 4 and Piotski scoreof 3.
– Average 1 month return for industry is 0.7%. The max 1- month return was given by Bajaj Holdings: a return of 8.4 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 6742.0 cr compared to Rs 6648.0 cr for period ended Jun 2020, a rise of 1.4%
Operating Profits reported at Rs 3035.0 cr for period ended Jun 2021 vis-vis 2758.0 for period ended Jun 2020 .
Operating Margins expanded 353.0 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 16.61 compared to Rs 22.35 for previous quarter ended Mar 2021 and Rs 15.99 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 26762.0 cr for period ended TTM vis-vis sales of Rs 26673.0 cr for the period ended Mar 2021, a growth of 0.3%. The 3 year sales cagr stood at 13.1%.
Operating margins expanded to 6364.0% for period ended TTM vis-vis 6314.0% for period ended Mar 2021, expansion of 5000.0 bps.
Net Profit reported at Rs 4460.0 cr for period ended TTM vis-vis sales of Rs 4420.0 cr for the period ended Mar 2021, rising 0.9%.
Company recorded a Net Profit CAGR of 3.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs -881.0 cr for period ended Mar 2021 vis-vis Rs -24412.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 75% on a 1 Year basis vis-vis a return of 30% over the last 3 Years. – The compounded sales growth on a TTM bassis is 1% vis-vis a compounded sales growth of 28% over the last 3 Years. – The compounded profit growth on a TTM basis is -16% vis-vis a compounded profit growth of 21% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 24.03% vis-vis 24.06% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 10.4% vis-vis 10.57% for Mar 2021
Conclusion
– has delivered good profit growth of 28.18% CAGR over last 5 years – Stock is trading at 9.83 times its book value
– has low interest coverage ratio.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 5887.94 and is trading at 6015.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
