Shares of Bajaj Finance surged in trade on Wednesday morning, after the firm said that it has received board approval for its proposed QIP (qualified institutional placement) to raise up to Rs 8,500 crore.
Shares of Bajaj Finance surged in trade on Wednesday morning, after the firm said that it has received board approval for its proposed QIP (qualified institutional placement) to raise up to Rs 8,500 crore. Bajaj Finance share price surged more than 3% to hit the day’s high at Rs 3,464 on BSE. Bajaj Finance said that it will raise up to Rs 8,500 crore through qualified institutional placement (QIP) by issuing equity shares. The board approval is subject to shareholders’ nod to be sought through a postal ballot, the firm added.
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During the reporting of its quarterly results, Bajaj Finance had said that it looks to raise around $1 billion to $1.2 billion through external borrowing in around September and October. Rajeev Jain, Bajaj Finance MD explained that this was part of the plan to diversify the firm’s liability and would take care of their requirement for the next two years growth plans. “We have not seen this kind of liquidity squeeze in the bond market. Such is the intensity of the crisis that nobody is able to raise long-term resources,” Jain said. “We raised Rs 4,500 crore in 15-year bonds indicative of the faith in the long term future of the company,” he had said. Depending on how Q2FY20 goes, they will decide the external borrowing schedule but it would happen in this calendar year, Jain said.
In the April-June quarter, Bajaj Finance has reported record quarterly profit led by strong growth in net interest income. The firm has reported a 43% on-year rise in net profit to Rs 1,195 crore as the the end of June quarter. The company had posted a net profit of Rs 836 crore in the comparable period previous fiscal. Net interest income increased 43% to Rs 3,695 crore from Rs 2,579 crore in the first quarter previous year. The firm’s Consolidated assets under management grew 41% to Rs 1,28,898 crore.
Following the quarterly results, Morgan Stanley said that the consolidated Profit After Tax came in 5% below its estimate of Rs 1,250 crore. Higher provisions in the quarter of 180 bps of average loans was the main reason behind subdued earnings, said the firm. The revenue is up 43% on-year, beating estimates by 3%. Morgan Stanley an ‘equal-weight’ rating on the shares with a target price of Rs 2,950.