2 Big Bajaj Stocks In Focus: Bajaj Finance Launches Rs 8,800 Crore QIP, Fixes Floor Price; Details Here

The two largest Bajaj stocks were trending on Tuesday after Bajaj Finance announced the launch of its Rs 8,800 crore worth of Qualified Institutions Placement (QIPs). Also, the NBFC giant announced the floor price for its QIP. Both Bajaj Finance and its parent Bajaj Finserv shares held a bearish tone in the day's trading session.

At the time of writing, Bajaj Finance's share price traded at Rs 7,453.80 apiece, down by 1.41% on BSE with m-cap of Rs 4,51,639.93 crore. The stock has dropped by at least 1.5% with an intraday low of Rs 7,446.70 apiece.

Meantime, Bajaj Finserv's share price dipped by over 0.6% to trade at Rs 1,554.25 apiece on BSE with a market cap of Rs 2,48,393.68 crore. The stock has dipped nearly 1% with an intraday low of Rs 1,550.55 apiece.

In its regulatory filing on Monday, Bajaj Finance said, "approving and adopting the preliminary placement document dated 6 November 2023 and the application form in connection with the Issue." Also, the board of directors in a meeting held on the day approved the floor price for the Issue, based on the pricing formula as prescribed under the SEBI ICDR Regulations.

Accordingly, the board authorised the opening date for the QIP on November 6, 2023. While they announced a floor price of Rs 7,533.81 per Equity Share for the issue. Currently, Bajaj Finance's share price is trading below the floor price.

Furthermore, Bajaj Finance said that the Issue price will be determined by the Company in consultation with the book-running lead managers appointed for the Issue.

On October 5th, Bajaj Finance's board approved the fundraising of Rs 10,000 crore or approximately $1.21 billion through a mixture of qualified institutional placements (QIPs) and preferential issues.

The QIPs are to the tune of Rs 8,800 crore to institutional buyers and are offered at a face value of Rs 2 each.

Meanwhile, Bajaj Finance will raise the rest of Rs 1,200 crore through preferential issues. Under this plan, the NBFC will issue up to 15,50,000 warrants convertible into an equivalent number of Equity Shares of face value of Rs 2 each. Promoter and holding company, Bajaj Finserv is the proposed allottee in the preferential issue.

Bajaj Finserv's shareholding in Bajaj Finance will increase to 31,93,66,130 equity shares or 52.27% in the post-preferential issue, compared to the pre-issue where its shareholding is at 31,78,16,130 equity shares or 52.45%.

In 2QFY24, Bajaj Finance (BAF) reported a strong, all-around quarter with 30% PPOP growth (YoY), and 28% PAT growth (YoY) with continued stability in portfolio metrics and operating leverage. AUM growth stood at 33% YoY led by growth across segments - auto finance (+63% YoY), SME (+38% YoY), and mortgages (+28% YoY). However, the rural B2C segment continued at a moderate pace. Reported NIMs moderated by 14bps QoQ during the quarter primarily led by higher cost of funds, the brokerage JM Financial highlighted.

Further, the brokerage's note said, " Management indicated NIMs could moderate further 25-30bps given the volatility in rates though the impact on RoAs could be offset by better operating leverage and lower credit costs. While acknowledging concerns on competitive intensity in unsecured loans and higher customer leverage, mgmt highlighted its portfolio quality metrics remain significantly better than the industry and they have already taken proactive measures concerning cutting out growth in certain segments. As such, the overall environment remains sanguine in the large buckets of the unsecured lending market. Digital initiatives continue to scale up well with continued momentum on app installs, digital acquisition and payments are gathering further momentum. We expect Bajaj Finance to deliver 29% CAGR in AUM and 27.5% CAGR in earnings over FY23-25E as operating leverage sustains. Bajaj Finance remains our top pick in the sector. Maintain BUY."

JM has set a target price of Rs 9,500 apiece on Bajaj Finance going forward.