So, what are the key factors behind this sharp rise in the share price of Bajaj Finserv?
Let’s dig a little deeper into this…
#1 Quarterly Results
On 28 July 2022, Bajaj Finserv announced its outstanding quarterly results.
Its consolidated net profit for the quarter ended June 2022 jumped 57% to ₹13.1 bn. It stood at ₹8.3 bn a year ago.
Revenues for the quarter increased 145% year on year (YoY) to ₹158.9 bn.
The company’s subsidiary Bajaj Finance's assets under management (AUM) have surpassed the ₹2,000 bnmark, standing at ₹2,040 bn.
Bajaj Finance also reported the highest quarterly consolidated profit after tax (PAT) of ₹2.5 bnin the June 2022 quarter. Thanks to strong AUM growth, higher net interest income, and improved asset performance.
PAT increased by 96% at its wholly owned corporation Bajaj Housing Finance Loan(BHFL).
Bajaj Finserv appears to be benefitting from its own strong performance and from the strong performance of its subsidiaries.
Bajaj Finserv is a consistent compounding stock that has beaten market volatility to deliver both great results, and a sharp rise in stock price. It is one of the fastest growing companies in India.
#2 Stock Split and Bonus Issue
The board of directors of Bajaj Finserv approved the split of its equity shares in the ratio of 5:1.
In simple words, each share with a face value of ₹5 will be divided into 5 shares with a face value of ₹1.
As per company exchange filling, the following describes the goals of the stock split and bonus:
The company and its subsidiaries have grown significantly, in terms of business and performance, over the years.
Among its peers, the share price of the company is one of the highest while having one of the smallest capital bases.
As and when the stock price rises further, it will be increasingly difficult for small potential shareholders to partake in the company's future.
The stock split is intended to increase liquidity in the capital market. Additionally, it will broaden the shareholder base.
In addition, the company has announced the issuance of bonus shares with a face value of Re 1 for every fully paid-up equity share of Re 1. This implies the bonus shares will be distributed following the stock split.
Corporate action events such as bonus issues and stock split frequently cause changes in a company's capital structure.
The investors have welcomed this decision with great euphoria.
Bajaj Finserv Performance Lately
Today, Bajaj Finserv share price opened the day 2% higher at ₹15,000. The previous close was ₹14,650.
In the past 5 trading sessions, the share price has rallied more than 17%.
Bajaj Finserv hit a 52-week high of ₹19,320 on 19 October 2021. And its 52-week low of ₹10,777, which it reached earlier this month on 1 July.
On a YTD basis, Bajaj Finserv's share price is down 11% so far.
Bajaj Finserv Share Price Performance – 1 Year
About Bajaj Finserv
Bajaj Finserv was formed in 2007 as a result of its de-merger from Bajaj Auto.
It is the holding company for the Bajaj group's financial services businesses.
It provides solutions for asset acquisition through financing, and asset protection through general insurance. It also offers family protection, and income protection in the form of life and health insurance as well as retirement, and savings solutions, to millions of customers.
Disclaimer:This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
