InvestorQ : Bajaj Finance has again reported very strong results but I am little wary to buy at this price. What should I do with respect to Bajaj Finance?
Neelam Naik made post

Bajaj Finance has again reported very strong results but I am little wary to buy at this price. What should I do with respect to Bajaj Finance?

Answer
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Priyanka N answered.
1 year ago


If you look at the March quarter results of Bajaj Finance, they have 57% growth in net profits to Rs.1176 crore. Even for the full year, the net profits of Bajaj Finance were 50% higher at Rs.3395 crore. It is this consistent growth in profits hat has ensured such good valuations (P/E ratio) for Bajaj Finance. Although the stock did correct did correct during the NBFC crisis last October, it has since recovered all its losses and is nearly 60% higher. The company has also managed to keep its NPAs well in check with gross NPAs at 1.54% and net NPAs at just 0.63%. In fact, Bajaj Finance is the only NBFC to have recovered all its price loss after the NBFC correction.

It has hard to say that Bajaj Finance is expensive because it quotes at around 50X profits. That is understandable considering its strong retail franchise and the high end NPA management. Unlike other NBFCs and HFCs, Bajaj Finance does not have the problem of asset liability mismatch as it borrows and lends at the short end of the yield curve. Bajaj Finance is not only a play on the NBFC space but also a play on consumerism expansion in India. There are two ways to approach the stock. You can either look to accumulate the stock and expect slight market outperformance from currency valuations. Alternatively, you can also use the strategy of buying into the stock at dips. There is no doubting the quality of the stock, although you can make a choice on the entry price.