After closing on a positive note for the second consecutive week in a row S&P BSE Sensex gaining 2.7 per cent last week. Global events and domestic events such as June quarter results will continue to steer the market direction.
The week ended July 29, seemed like a bumper one for Bajaj group with two of its group companies, topping the returns’ chart on a weekly basis. Among the S&P BSE 500 Index constituents, Bajaj Finserv gained the most on a 5-day return basis, with a gain of 18 per cent. The other stock from the Bajaj stable that handed out neat gains to investors is Bajaj Finance (15 per cent). Bajaj Finance is a subsidiary of Baja Financial Services Ltd (Bajaj Finserv).
Bajaj Finserv, which is the non-banking financial services arm of the Bajaj Group also operates other segments such as asset management, lending, insurance, and wealth management. The strong rally in the company’s stock is on two counts. One, stellar performance in the June quarter besides the management’s decision to do a stock split in the ration of 5:1 (five new shares of par value of ₹1 for all the investors in the company. The company’s operational revenue grew by 14 per cent to ₹15,888 crore, of this interest income grew 29 per cent to ₹8,971 crore during the quarter, compared to the same period, last year. The net profit for the period grew by a whopping 57 per cent to ₹1,308 crore. But what really helped the stock zoom was the bonus announcement of 1:1, besides a stock split from the current face value of ₹5 to ₹1 per share. All though stocks splits and bonus issues do not add any fundamental value to stocks, markets tend to get excited as investor base can increase due to lower price of the shares post the split/bonus issue. The stock at the current market price trades about 5.12 times its estimated FY23 book value of ₹2,439. On estimated earning per share basis, the stock trades at about 38 times its estimated FY23 earnings.
Bajaj Finance stock’s impressive performance last week was aided by its robust performance in the June quarter. Bajaj Finance posted superior performance for the June quarter, with a 31 per cent growth in core assets under management (AUM) to ₹204,018 crore. Profit after tax soared 159 per cent to ₹2,596 crore. The company’s net non-performing assets was also contained at 0.51 per cent in June 2022.
Other stock that fared well last week is that of specialty chemical manufacturer Navin Fluorine Ltd. The 15 per cent up move in the stock price was helped by the company’s healthy performance in the June quarter. A key player in refrigeration gases, the company also has presence in inorganic fluorides, specialty fluorochemicals. In addition to these, Navin is also into contract development and manufacturing for custom chemical synthesis of fluorinated compounds for pharma, agro chemicals, and specialty chemical players. For the June quarter the company recorded operating revenue growth of 22 per cent to ₹397 crore compared to the quarter ended June 2021. The net profit for the period was higher by 33 per cent at ₹74.5 crore vis-a-vis same period previous year. The growth for the quarter was driven by specialty business and HPP (high performance product) division. The stock trades about 60 times its estimated FY23 earnings.
July 30, 2022