Dalal Street Investment Journal - - QUERYBOARD -

I am hold­ing 26 shares of Ba­jaj Fi­nance @ 1975. Should I con­tinue to hold the stock or exit at cur­rent level? - San­desh Dhuri

Ba­jaj Fi­nance Ltd (For­merly Known as Ba­jaj Auto Fi­nance Ltd) is a sub­sidiary of Ba­jaj Fin­serv. It is an In­dian non-bank­ing fi­nan­cial com­pany (NBFC) en­gaged in lend­ing and al­lied ac­tiv­i­ties. It fo­cuses on con­sumer lend­ing, small and medium-sized en­ter­prises (SME) lend­ing, com­mer­cial lend­ing, ru­ral lend­ing, fixed de­posits and val­ueadded ser­vices. The 29-year-old com­pany is the most di­ver­si­fied non-bank in In­dia with a demon­strated track record of prof­itabil­ity.

Head­quar­tered at Pune, the com­pany has a pan–in­dia pres­ence with 294 con­sumer branches with over 33,000 dis­tri­bu­tion points. BFL is amongst very few NBFCS in the In­dia to re­ceive FAAA rat­ing from Credit Rat­ing and In­for­ma­tion Ser­vices In­dia (CRISIL), re­flect­ing the high­est level of safety of de­pos­i­tors’ money. The com­pany’s short–term debt pro­gramme has been awarded with P1+ rat­ing from CRISIL. Its long–term debt pro­gramme has re­ceived Aa+/sta­ble from CRISIL and LAA+ from ICRA.

On the fi­nan­cial front, Ba­jaj Fi­nance Ltd’s rev­enue in­creased 37.79 per cent to ₹ 3,150.47 Crore in Q1FY18 from ₹ 2,286.40 crore in Q1FY17. More­over, the com­pany’s PBDT in­creased by 41.91 per cent to ₹ 947.31 crore in the first quar­ter of FY18 vis-àvis ₹ 667.51 Crore in Q1FY17. The com­pany’s net profit also in­creased by 41.19 per cent to ₹ 602.04 crore for the same pe­riod.

On an an­nual ba­sis, the com­pany’s rev­enue im­proved 36.59 per cent to ₹ 9,977.36 crore in FY17 com­pared to the pre­vi­ous fis­cal. The com­pany’s PBDT in­creased by 42.9 per cent to ₹ 2,888.68 crore in FY17 on a yearly ba­sis. The com­pany’s net profit in­creased from ₹ 1,278.52 crore in FY16 to ₹ 1,836.55 crore in FY17. Com­pany has good con­sis­tent profit growth of 35.20 per cent over 5 years. How­ever, the pro­moter’s stake has de­creased. Con­sid­er­ing all the fac­tors, we rec­om­mend our reader-in­vestors to HOLD the stock.

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