This Pre-Covid warhorse is losing charm on D-Street

Mumbai: Bajaj Finance shares took a hit on Wednesday after a weak second-quarter business update.The stock, which has had a stellar run since March, fell 4 per cent to close at Rs 3,331.20 on Wednesday. It may decline further by 8 per cent to near Rs 3,000 levels soon, said analysts.Open interest in Bajaj Finance futures at the beginning of October series was at a three-year low because of the unwinding of long positions, said Motilal Oswal’s technical and derivatives analyst Jay Purohit. “We may see the stock falling to Rs 3,050-Rs 3,100 in the ongoing series. We see a strong hurdle at 3,500 for the stock,” said Purohit.The company in its business update reported a growth of 1.3 per cent year-on-year in its assets under management (AUM) which, according to analysts, was muted.“...company performance in the near-term will be muted because of the nature of its loan mix which will be highly weighed upon by the lockdown situation. At the same time, we expect management capability will help in navigating the current crisis,” said Axis Securities in a note, maintaining a hold rating on the stock with a target price of Rs 3,375.Motilal Oswal has maintained a neutral rating on Bajaj Finance, saying that while the number of loans disbursed doubled sequentially, it was down around 45 per cent from year-ago levels.“The sharp decline in disbursement volumes has come as a bit of a disappointment. Nevertheless, we believe it is a good strategy to curtail disbursements in this uncertain environment,” said Motilal Oswal, cutting FY21-FY22 EPS estimates by 4-8 per cent. “This stance is likely to continue for another quarter or so,” said Motilal Oswal.Bajaj Finance shares have gained 87 per cent since May when the stock hit a 52-week low.“The AUM growth for Bajaj Finance was fairly low, and there was a lack of positive surprise, in contrast to commentary from peers and banks which have given more positive commentary recently. We believe that while near-term impact on growth is there, the healthy customer additions indicate improvement in the long-term outlook,” said Lalitabh Shrivastawa, AVP — research, at Sharekhan.

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