BAJFINANCE - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | BAJFINANCE | Market Cap | 5,99,381 Cr. | Current Price | 964 ₹ | High / Low | 1,102 ₹ |
| Stock P/E | 37.3 | Book Value | 150 ₹ | Dividend Yield | 0.46 % | ROCE | 11.5 % |
| ROE | 18.5 % | Face Value | 1.00 ₹ | DMA 50 | 970 ₹ | DMA 200 | 946 ₹ |
| Chg in FII Hold | -0.48 % | Chg in DII Hold | 0.47 % | PAT Qtr | 3,750 Cr. | PAT Prev Qtr | 4,251 Cr. |
| RSI | 52.9 | MACD | -13.0 | Volume | 1,83,40,137 | Avg Vol 1Wk | 1,12,52,411 |
| Low price | 802 ₹ | High price | 1,102 ₹ | PEG Ratio | 1.15 | Debt to equity | 3.18 |
| 52w Index | 53.7 % | Qtr Profit Var | 1.19 % | EPS | 27.2 ₹ | Industry PE | 18.9 |
📊 Analysis: BAJFINANCE is a leading NBFC with strong fundamentals. ROE at 18.5% reflects healthy shareholder returns, while ROCE at 11.5% is modest due to high leverage (debt-to-equity 3.18). The stock trades at a P/E of 37.3, significantly higher than the industry average of 18.9, suggesting overvaluation. PEG ratio of 1.15 indicates growth is fairly priced but not cheap. Dividend yield of 0.46% adds limited income. EPS of ₹27.2 and quarterly PAT of ₹3,750 Cr. highlight earnings strength, though profit growth has slowed (+1.19%). Technical indicators (RSI 52.9, MACD negative) suggest neutral to slightly bearish momentum.
💰 Entry Price Zone: Ideal entry would be in the ₹880 – ₹930 range, closer to DMA 200 (₹946) and 52-week low of ₹802, offering better risk-reward alignment.
⏳ Exit Strategy / Holding Period: For existing holders, a long-term horizon (3–5 years) is advisable given strong brand and growth potential. Consider partial profit booking near ₹1,080–₹1,100 (52-week high zone) unless earnings growth accelerates further to justify valuations.
✅ Positive
- ROE of 18.5% indicates healthy profitability.
- PEG ratio of 1.15 suggests growth is reasonably priced.
- Quarterly PAT of ₹3,750 Cr. shows strong earnings base.
- DII holdings increased (+0.47%), reflecting domestic institutional confidence.
⚠️ Limitation
- High P/E (37.3) compared to industry average (18.9).
- ROCE at 11.5% is modest due to high leverage.
- Debt-to-equity ratio of 3.18 reflects significant borrowing typical of NBFCs.
- FII holdings reduced (-0.48%), showing cautious foreign sentiment.
- Quarterly profit growth slowed (+1.19%), limiting upside momentum.
📉 Company Negative News
- Slower profit growth compared to previous quarters raises concerns about momentum.
- High leverage increases risk in volatile interest rate environments.
📈 Company Positive News
- Strong EPS of ₹27.2 supports earnings visibility.
- Consistent profitability with PAT above ₹3,700 Cr.
- DII holdings increased, showing domestic confidence in fundamentals.
🏭 Industry
- NBFC sector trades at an average P/E of 18.9, much lower than BAJFINANCE’s valuation.
- Industry outlook remains positive with rising credit demand and financial inclusion.
🔎 Conclusion
BAJFINANCE is a fundamentally strong NBFC but currently overvalued relative to peers. Long-term investors may hold with a 3–5 year horizon, while new investors should wait for a correction towards ₹880–₹930 before entering. Profit booking near highs is advisable unless earnings growth accelerates significantly.