Bajaj Finance Soars Over 4% in Share Price: Is it Time to Buy or Stay Away from the Stock?

Bajaj Finance share price rises over 4%

Amid news of a fundraising meeting, Bajaj Finance’s stock increases by more than 4%.

During morning trading on the BSE, Bajaj Finance’s share price significantly increased by more than 4%. This rally occurs amid a generally subpar market performance. The increase came after the corporation disclosed that its board of directors would meet the following week to examine prospective fundraising strategies.

The stock started the day’s trading at 7,594.95, above its previous closing price of 7,472.50, and increased by more than 4% to hit an intraday high of 7,780.

Bajaj Finance announced in an exchange filing that was made available after market close on the prior Friday that “a meeting of the board of directors of Bajaj Finance will be held on Thursday, 5 October 2023, to consider the proposal for raising funds through any or all of the various methods, including by way of preferential issue, qualified institutions placement, subject to such regulatory and statutory approvals as may be required, including approval of the shareholders of the company.”

It’s important to note that over the past year, the share price of benchmark Bajaj Finance has underperformed the Sensex, posting a small rise of about 7% as opposed to the Sensex’s almost 15% gain over that time.

Even so, a lot of industry professionals and brokerage houses continue to have an optimistic stance on Bajaj Finance’s long-term prospects. For instance, Motilal Oswal Financial Services thinks that following the company’s announcement of a capital raise, the stock may rise even further.

According to Motilal Oswal, Bajaj Finance’s ‘omni-channel’ transformation and digital ecosystem are key elements that can increase fee income and the company’s capacity for client growth and disbursement momentum. They have recommended buying the stock and set a target price of $8,800, which represents an 18% potential gain.

A worldwide brokerage firm named Jefferies continues to recommend buying Bajaj Finance and has set a target price of $8,830. If the company raises 10-15% of its net worth, they forecast a 2% dilution with probable increases in FY24 EPS and BVPS of 6% and 11%, respectively, even if RoE may slightly decrease to 22%.

Similarly, according to CNBC-TV18, CLSA has a buy recommendation with a target price of 9,500 for Bajaj Finance.

Technical analysts contend that while the stock is currently encountering near-term resistance, it appears to be positive for long-term investing. At this point, investors are recommended to think about taking some profits, especially as the stock moves closer to its crucial resistance area. The stock may rise to as high as 9,000 if this resistance is broken on a weekly basis. But until the breakthrough is validated, analysts advise taking partial profits at higher levels, with new entry positions dependant on the validation of the breakout.

It’s crucial to understand that these opinions and suggestions are those of certain analysts, subject matter experts, and brokerage firms and do not necessarily represent Mint’s official position. Investors are advised to speak with licensed professionals before making any financial decisions.

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