Bajaj Finance & Finserve - Jack and Jill ride in the market...

Bajaj Finance is a leading Non-Banking Financial Company (NBFC) with a focus on retail lending, whereas Bajaj Finserv is a holding company of the Bajaj group that holds a stake in financial and insurance companies of the group like Bajaj Finance, Bajaj Allianz life insurance, and General Insurance. 

Bajaj Finance, the lending and investment arm of the Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market catering to more than 19 million customers across the country. 

The company has shown exponential growth over the past 5 - 6 years under the financial sector. Expansion of their services and products in rural areas has clearly isolated them to show profitable income compared to other NBFCs.

With consistent profit every financial year, Consumer loans grew by over 50 %, while loans to small businesses increased by 38 %.

Financial

Bajaj Finance Ltd on Monday (17th Feb 2020) replaced State Bank of India (SBI) to become India's tenth most-valued firm by market capitalization on the BSE.

According to the BSE, Bajaj Finance's market capitalization stood at ₹2.87 trillion, with its shares trading at ₹4,773.85 on the BSE. The finance company's shares have risen nearly 12% so far this year.

Peer comparison

Assets Under Management (AUM) as of 31 March 2019 were RS. 98,671 crore as compared to RS. 78,852 crore as on 31 March 2018, an increase of 25% over the previous year. 

The consolidated AUM as on 31 March 2019 stood at RS. 115,888 crore, an increase of 41% over the previous year.

Loans receivables as of 31 March 2019 were RS. 95,181 crore as compared to RS. 75,533 crore as on 31 March 2018, an increase of 26% over the previous year. The consolidated loan receivables as on 31 March 2019 stood at RS. 112,513 crore, an increase of 42% over the previous year.

Total income during FY2019 increased to RS. 17,401 crore from RS. 12,650 crore during FY2018 registering a growth of 38% over the previous year.

WHY BAJAJ FINANCE FIXED DEPOSIT IS THE BEST INVESTMENT OPTION FOR 2020

• Competitive rate of interest and flexible tenure.
• Loan against your FD.
• Zero market risk.
• Complete Security.

The Deposit book has record whopping 69% growth from its last financial year.

However, after putting the stunning show year on year, the company and its stock came tumbling down recently due to the pandemic effect of coronavirus and its effect on consumption slowdown.

REASON...

A global investment advisory firm Bernstein downgraded the non-banking financial major to ‘Underperform’ with the price target of Rs 1,740, citing unsecured consumer finance business models would become challenging in the current pandemic environment.

Amid the current early stage of COVID outbreak in India, Bernstein said that it is uncertain to project how long the physical restrictions from the government would last beyond the 21-days imposed lockdown.

from recording a high of Rs. 4923 on Feb 20, 2020, the stocks fell sharply to Rs. 2100 level, recording its lowest on 31st march. "predicting the economical recession and consumer consumption - the lower level is still expected in the coming times"

The Reserve Bank of India (RBI), on March 27, granted a three-month moratorium on outstanding term loans. The move was a part of the central bank's measures to help depositors during the coronavirus outbreak.

For non-banking finance companies (NBFCs), the three-month moratorium on term loans will impact their cash flows and place pressure on asset-liability management (ALM)

Consumption Slowdown may continue for a few months.

Promoter Holding reduced by 2.11 %

Since the outbreak of the coronavirus, the entire Global Market has seen a drastic fall in various sectors, Banking, and Finance industry were the worst hit. Speculation of an economic recession is making news.

Leading toward the Equity Investing Guide, let's look at Strength, Opportunity, Valuation and Perfect Price to pick them.

Strength...

Quarter 2 and Quarter 3 result may turn out to be negative but with a trend reversal, it is expected to outperform in the coming years. 

Hold it for the Long Term Investment. 

ROE (Return on Equity) is good.

Suggestion...

Opportunity to grab the stocks of  Bajaj Finance and Finserv which was once considered to be OVERVALUED, now available at the mouth-watering Price Level to hold it in your portfolio.

Buy...

Bajaj Finance  

(Entry Level)

prediction - stock price will fall 6% every week, buy at every dip.

Price Level:2100 (Nifty Range 8300 - 8250) - invest with 20 % Capital.

Price Level: 2000 (Nifty Range 8250 - 8000) - invest with 30% Capital.

Price Level: 1900 (Nifty Range 8000 - 7850) - invest with 40 % Capital.

Price Level: 1850 (Nifty Range 7850 - 7400) - invest with 60 % Capital.

to balance your capital investment.

Level acts as SUPPORT on a technical chart. 

EXPECT THE MARKET TO REVERSE BY AUG - SEPT 2020 if a pandemic is under control

April 1, 2020: Press Release: http://www.careratings.com/upload/CompanyFiles/PR/Bajaj%20Finance%20Limited-04-01-2020.pdf

Latest update; April 24, 2020 - both Bajaj finance and Finserv recorded their lowest level as the stock fell 29 % as major NBFC collapsed on the news of the Liquidity issue. Bajaj Finance was trading at Rs. 1881 (last recorded this level on May 2017) and Bajaj Finserv at Rs 4389.  In the past two months, the stock has tanked 59 percent, as compared to 22 percent decline in the S&P BSE Sensex.