Bajaj Finance has been among the top active stocks as well as the top gainer for September 25, 2023. The stock is rising as the company, in a circular to the exchange, informed the market that it will hold a board meeting on October 5 to consider a fund-raising plan. According to the news, the mega fund-raising program could range from $800 million to $1 billion. However, the company did not mention the amount it plans to raise or the utilisation of the same.
Bajaj Finance Limited, formerly known as Bajaj Auto Finance Limited, is a subsidiary of Bajaj Finserv Limited that specializes in lending and deposit acceptance. The company has a diverse lending portfolio across retail, SMEs, and commercial customers, with a significant presence in both urban and rural India. Bajaj Finance has two wholly owned subsidiaries, Bajaj Housing Finance Ltd. (BHFL) and Bajaj Financial Securities Ltd. The leading NBFC has experienced significant growth in its assets under management (AUM). In 2022, the company expanded its geographic presence by adding 516 locations, reaching 3,504 locations with a distribution network of over 133,200 points of sale.
The fundraising is expected to be done through the QIP, or preferential issue route, with four investment banks shortlisted for the proposed deal. With its strong financial position, lowest ever gross NPA, growth momentum, well-provisioned balance sheet, omnichannel business strategy, and strong entry momentum into FY2024, the management said the company is confident about its growth prospects in the coming years. The company has gotten many buy-in calls from many research firms, reflecting a strong upside potential, and this fund-raising program could be an indication that the company might be preparing a war chest for changes in the competitive landscape over the next few years, or we can say that the entry of Jio into the financial services business
The company's total revenue has increased by 30% year over year, whereas its expenses rose by 17%. The profit for FY2023 rose by 63%, with a net profit margin of 27.79%. Operating profit margins have been rising for the last three fiscal years. Bajaj Finance has clocked an annualized RoE of 23 percent over each of the last five quarters. It reported a 24 percent ROE in FY23. The company had a liquidity buffer of Rs 12,704 crore as of June-end. The capital adequacy remained strong at 24.61 percent as of June 30, with tier-1 capital at 23.01 percent.
Year to date, the stock has appreciated by 18%, whereas the benchmark Nifty index is up 8.31%. The stock at the time of reporting was trading at Rs. 7790.