Stock investing is a time-consuming exercise on your own. Investors tend to worry on excessive risk in stock investing. However, a calculated risk can turn your stock investing into a winning proposition rather than an exercise in uncertainty. Stock investing is quite systematic and logical if you know the approach, which stocks you intend to invest in, and the reasons for it. The rationale should justify the risk you will take to put your hard-earned money into the stock for a period of time.
When you start looking at good stocks in the market – financial services as a sector is a profitable candidate. Choose the best stock within this sector which is an outperformer and has a business model set on the growth path. Bajaj Finance fits this bill with tremendous growth during the last ten years. Here are five reasons why owning Bajaj Finance share will change your life-
Reason 1: Bajaj Finance’s performance as a company – Bajaj Finance as a company has outperformed its peers in terms of revenue and profits both. Bajaj Finance’s customer base has grown 32% for FY2019 as compared to a year earlier when it was 28%. The number of new loans also rose by 50% on a year-on-year comparison in FY2019. In spite of funding challenges faced by the industry as a whole, it has managed to deliver strong results and keep its cost of funding increase by only 0.5%.
The latest quarterly results (as on December 31, 2019) show the company reporting an increase of 52% in consolidated net profit. The company saw its consolidated profit grow to Rs. 1,614 crores in Q3 FY20. Its customer base has increased to 40.38 million and new loans increased by 13% to close at 7.67 million in Q3 FY20.
Reason 2: Bajaj Finance Share Price Growth – Bajaj Finance Share Price has soared 13743% during the last ten years. This is one of the most meteoric rises for any stock and shows the consumer and investor confidence in the company. It outperformed its peers like M&M financials, Shriram Transport and Cholamandalam Finance by a large margin. Anyone who invested Rs. 1 lakh in 2010 would have easily made around Rs. 1.38 crores today.
Bajaj Finance share price increased by 4% in a single day on January 29, 2020, when the Q3 FY20 results were announced.
Reason 3: High Investor Interest – Bajaj Finance is a favourite among qualified institutional investors like BlackRock, Nomura, Axis Capital, Morgan Stanley to name a few who grabbed the Rs. 8,500 crores share sale under the Qualified Institutional Placement (QIP) deal conducted in 2019. This is encouraging for Indian retail investors as well.
Reason 4: Future Growth Prospects – The company is poised to grow even more as it grew is customer franchise by 24% in Q3 FY20 (as compared to Q3 FY19) and the assets under management (AUM) grew by 35% during the same period. , Bajaj financial securities 100% subsidiary of Bajaj Finance, has launched a technology-based trading platform backed by expert market research for service to retail and ultra-high net worth customer. It aims to disrupt the market with attractive annual subscription packs for trading. It has also taken the lead in the investments market by introducing one-of-a-kind Systematic Deposit Plan (SDP) which will allow millennials and new jobbers to save with discipline without restricting their expenditures.
It’s lending business which is the largest has shifted its focus on SME and rural lending as well. This will help it cross-sell its investment products like insurance and FDs to the underserved categories who have low access to banking channels.
Reason 5: Strong Fundamentals and Efficiency – The company is run by prudent management which has set its standards in managing operational costs. The company’s operational costs for Q3 FY20 are just 33.9% of its revenues which shows it is a well-run company. The capital adequacy ratios are also well-above at 20.66% as compared to RBI’s mandated rates of 15%. Its NPAs are the lowest in the industry at 0.70% for Q3 FY20 which in itself is a commendable position to command. The banking sector is reeling with high NPAs and an NBFC like Bajaj Finance is surely a strong lender. The company’s debt is rated AAA and its FDs also enjoy the highest rating from CRISIL and ICRA.
Thus, all these factors present a formidable case for you to consider Bajaj Finance as a strong stock in your portfolio. Bajaj Finance is a blue-chip stock worth holding on to to help you attain your future financial goals.