Bajaj Finserv hits over 3-month high; stock zooms 30% in a month

Shares of Bajaj Finserv hit over three-month high of Rs 15,584, up 3 per cent on the BSE in Monday’s trade. The stock extended its gain after the company approved 1:1 bonus issue and 1:5 stock split in July. The stock traded at its highest level since April 26, 2022. In the past one month, it has rallied 30 per cent, as against 8 per cent rise in the S&P BSE Sensex.

Bajaj Finserv is primarily engaged in promotion of financial services such as insurance, broking, investments etc. It is a financial conglomerate with holding in financing business (Bajaj Finance), life insurance (Bajaj Life Insurance) and general insurance (Bajaj General Insurance) business.

On July 28, 2022, Bajaj Finserv’s board had approved sub-division of existing equity share of face value of Rs 5 into five equity shares of face value of Rs 1 fully paid- up. The board also approved issue of one bonus equity shares of face value of Rs 1 for every 1 equity share of Rs 1.

Highlighting the rationale behind the split and issue of bonus shares, the management said, "Our company and subsidiaries have grown significantly, in terms of business and performance over the years. This is reflected in the share price of the company, which touched peak of Rs 19,325 in October 2021. Since then, the price has hovered around Rs 12,200."

Currently, retail or individual shareholders comprise 98 per cent of the total number of shareholders, which hold around 17.52 per cent of paid-up value of shares. Amongst its peers, the share price of the company is one of the highest despite a small capital base.

Analysts at ICICI Securities have a ‘buy’ rating on Bajaj Finserv with target price of Rs 17,600 per share. They anticipate pick-up in lending AUM, healthy growth in insurance segment, and focus on digitization as positive triggers for future growth.

“Digital transformation, client additions and ambitious targets on AUM growth (25-27 per cent CAGR to Rs 3.8 – 4 trillion by FY25) will boost profitability. Product launch and selective product mix to aid premium growth; focus on claims and opex to aid earnings in life and general insurance business and healthy traction in all businesses will drive consolidated revenue and earnings for future price performance," the brokerage firm said.