Bajaj Finance Stock Price Analysis and Quick Research Report
Is Bajaj Finance an attractive stock to invest in?
Around 2% of India's total population invests in financial assets. The penetration of the mutual fund industry in India is close to 7% (Based on the number of PAN cardholders). This under penetration of the mutual fund industry offers a huge opportunity for the industry to grow.
Migration to financial savings, wider distribution and sustainable performance are expected to enable growth in the industry.
Also, increasing financial literacy among investors, digitization and the number of mediums available tend to attract more investors to invest in the financial markets.
To understand the functions of the Bajaj Finance better, you must go through the following points:
Key Financials –
Profitability: Profit margin (PAT margin) of the company shows how well a company controls its cost. It is one of the important indicators to show the financial health of the company. Net profit of the company is Rs 38900 Cr and the compounded growth of profit in the past 3 years is 44.8859765330116 %. The PAT margin of Bajaj Finance is 22.3788927385402 %.
EPS growth: Investors should ensure the EPS figure is growing faster than revenue numbers because it indicates company management is increasing the efficiency with which it runs the company. In Bajaj Finance , the EPS grew by 56.12 % YOY.
Financial Ratios –
Return on Equity (ROE): The Company has a healthy ROE track record. The ROE of Bajaj Finance is at 22.1287347508516 % for the latest year.
P/E Ratio: Relative valuation metrics like the P/E ratio can be used to see if the stock of Bajaj Finance is worth at the current levels at Rs 1988.85. The stock is trading at a current P/E ratio of 44.85 and the average historical P/E for the last 5 years was 29.298.
P/B ratio can be one of the best metrics to value such companies. Currently, Bajaj Finance is trading at a P/B of 8.98231485428127 . The average historical P/B for the last 5 years was 6.296. This can be compared with the Market price per share in order to know if the stock is undervalued or overvalued.