Bajaj Finance plans capital raise, stock targets revised by brokerages

On Monday, Bajaj Finance’s shares experienced a surge after the non-banking financial company (NBFC) announced that its board will convene on October 5 to discuss raising funds through various methods, including preferential issuance of shares and qualified institutional placement (QIP). The company’s stock rose by Rs 264.5, or 3.5%, reaching Rs 7,737 per share at its peak for the day.

This news sparked high trading volume for Bajaj Finance shares on the exchange. By 9:35 am, the stock was maintaining a gain of 3.4% at Rs 7,727.3 per share. Approximately 26,000 Bajaj Finance shares were traded on Monday, compared to a daily average of 16,000 in the previous two weeks.

Following this announcement, global brokerage CLSA raised its target price on Bajaj Finance, predicting a 27% upside over the last close of Rs 7,474.85. CLSA now has a ‘Buy’ call on the stock with a target of Rs 9,500. The brokerage firm noted that this capital raise would help fuel long-term growth for the company.

Foreign brokerage Jefferies also maintains a ‘Buy’ stance on the stock with a target price of Rs 8,830 per share. According to Jefferies, if Bajaj Finance raises between 10-15% of its net worth, the issue size could range from Rs 8,000 crore to $1 billion. This potential capital raise could lead to an earnings per share and book value per share increase of 6% and 11% respectively for FY24E, despite an expected slight fall in return on equity (ROE) to 22%.

Motilal Oswal suggested that this capital raise could be an indication that Bajaj Finance is preparing for changes in the competitive landscape over the next few years, potentially to compete effectively with Jio Financial. Motilal reiterated a ‘Buy’ on the Bajaj Finance stock with a target price of Rs 8,800.

The Bajaj Finance stock has seen a rise of 21% over the past six months, demonstrating a strong performance in the market.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.