Bajaj Finance Limited Analysis

Bajaj Finance Limited mainly engaged in the business of lending and started its journey in the year 1987 as a vehicle financing company and now is the largest and most diversified NBFCs in India. It also accepts public and corporate deposits and offers variety of financial services products to its customers.

Bajaj Finance with an extensive market capitalization of almost 4,40,000 crores and profit of more than 8600 crores is no doubt one of the biggest NBFCs of India. Its profit growth is excellent at almost 93%. Its growth can be checked fundamentally by 10 Years CAGR which is standing at 53% and 5 Years CAGR at 31% which is tremendous.

As on March 31, 2022, assets under management (AUM) registered a growth of 10% quarter-on-quarter (Q-o-Q) and 27% year-on-year (Y-o-Y) to Rs 146,743 crores on a standalone basis, primarily contributed by a growth in consumer finance, commercial finance and rural lending portfolios. The AUM consisted primarily of personal and consumer durables loans (35%), mortgages (loans against property [LAP] and home loans including LRD (10%), SME loans and vendor financing (21%), two- and three-wheeler financing (7%), rural financing (13%), loan against securities (10%) and others (4%).

Although, with excellent fundamentals Bajaj Finance is standing apart but the only concern is the debt taken. Total Debt is amounting to almost 1,65,000 crores with debt-to-equity ratio at 3.78. Since, NBFCs generally borrow money from one hand and lends money from the other and they make profits by the difference in interest between borrowing and lending and basically this is the model so in this case, if we check the Crisil Rating for Bajaj Finance:

Long Term Rating: CRISIL AAA/Stable

Short Term Rating: CRISIL A1+

Now, if we check the weekly charts of BFL from 2008, we will find steady upward movement with very small correction as depicted below. This shows its uptrend from past 12 years.

Now, if we move to the daily charts we will find that it has took support from the trend line but was not able to break the previous high so if anyone wants to enter fresh they can enter above the previous high which is around 7700 or if it takes support again from the trend line.

Now, if BFL breaches the previous high, with strong fundamentals, it can even achieve the 8500, 9000 and even 9500 levels as per Fibonacci.

Above Information is for educational purpose only. No trades solicited.

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