Monday saw a big increase in the share price of Bajaj Finance as a result of its announcement of an upcoming board meeting on October 5. The main purpose of the conference is to discuss potential methods of raising money, such as a qualified institutional placement (QIP) and the issuance of preferential shares. Notably, the stock increased significantly by Rs 264.5 or 3.5% for the day, reaching a high of Rs 7,737 per share.
The trading volume for Bajaj Finance shares on the exchange increased as a result of this development. The stock was still performing well at 9:35 am, up 3.4%, and trading for Rs 7,727.3 per share. According to trading statistics, there was a noticeable increase in demand as 26,000 Bajaj Finance shares were traded during the day, exceeding the 16,000 shares that were traded daily on average over the previous two weeks.
A number of reputable brokerages have revised their opinions about Bajaj Finance in light of these developments. For instance, international brokerage CLSA increased its target price on the company, estimating an outstanding 27% potential increase from the most recent closing price of Rs 7,474.85. The stock now has a ‘Buy’ rating from CLSA, with a new target price of Rs 9,500. The brokerage business emphasized how the company’s long-term growth will be accelerated by this capital infusion.
The company continues to be rated as a “Buy” by overseas stockbroker Jefferies, which has a target price of Rs 8,830 per share. If Bajaj Finance moves forward with a capital raise equal to 10-15% of its net value, the issue size might range from Rs 8,000 crore to $1 billion, according to Jefferies. Despite a projected modest reduction in return on equity (ROE) to 22%, such a sizable capital infusion could potentially result in a 6% gain in earnings per share and an 11% lift in book value per share for FY24E.
On the other side, Motilal Oswal views this capital increase as a tactical step by Bajaj Finance to get ready for changes in the competitive landscape that are expected over the next several years. Given prospective competition from Jio Financial, this preparation may be intended to increase company competitiveness. With a target price of Rs 8,800, Motilal has retained its “Buy” rating for the shares of Bajaj Finance.
Bajaj Finance has had strong market performance, with its stock rising noticeably by 21% during the last six months.
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