1. Bajaj Finance is up 80% this year, but its long term returns are even more amazing

Bajaj Finance is up 80% this year, but its long term returns are even more amazing

The Bajaj finance stock which has returned nearly 80% on a year-to-date basis, added to the investor returns further today, rising as much as 2% after posting a good set of fiscal first quarter financial results.

By: | Updated: July 19, 2017 3:59 PM
The shares of the financial services firm have consistently outperformed the benchmark equity indices on a 1-year, 3-year, 5- year and 10-year basis.

The Bajaj finance stock which has returned nearly 80% on a year-to-date basis, added to the investor returns further today, rising as much as 2% after posting a good set of fiscal first quarter financial results. The fabulous results added to the exuberance for the ticker, with it rising to a lifetime high of  Rs 1,543 on NSE. Not only this, the shares of the financial services firm have consistently outperformed the benchmark equity indices on a 1-year, 3-year, 5- year and 10-year basis.

Bajaj Finance occupies a prominent space in Consumer Finance, SME (Small and Medium-sized Enterprises) and Commercial Lending and Wealth Management. A close scrutiny of the results reveal that the Bajaj Finance stock has improved it’s EPS by nearly 42%. The AUM (assets under management) as on 30 June 2017 spiked 39% to Rs 68,883 crore, up from Rs 49,608 crore a year ago. The total income for the quarter ended June 2017 was up by 39%. The most important contributor to the return has been the NII (Net Interest Income) which was up by 41%. This quarter also saw Bajaj Finance’s deposit book crossing a milestone of Rs 5,000 crore — to Rs 5,095 crore at the end of the three-month period. This may fuel the already growing interest in the stock.

Keeping with the RBI guidelines, Bajaj Finance has recently revised its NPA recognition policy to 90 days overdue. Previously, any amount overdue for more than 120 days beyond maturity date was categorized as NPA (non-performing asset). This might impact the net profit in the next quarter, as it is likely to increase the provisioning requirements. Provisions have already seen an increase of Rs 106 crores in the first quarter as compared to that in the previous year.

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