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Tuesday, November 22, 2011

Bajaj Finance Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Bajaj Finance Ltd

Story:Bajaj Finance Ltd (BFL) is among the leading non-banking financial companies (NBFCs) in India. It offers finance for purchase of two-wheelers, consumer durables, personal computers and personal loans. During FY10-11, two- and three-wheeler financing roped in 0.52 million customers. BFL’s two-wheeler financing is available across 351 Bajaj Auto dealer locations and 1,170 sub-dealers in India. The consumer durables’ financing business is present in 71 cities in India. Personal loans are granted across 81 cities, while BFL’s personal & small enterprise loans business operates in 23 cities. In the past fiscal, BFL introduced three new product lines—construction equipment finance, loans against securities and home loans.Despite tough economic conditions, BFL has managed to retain its credit ratings due to high capital adequacy, strong promoter support and robust asset-liability management. As against the RBI (Reserve Bank of India) norm of 12%, the capital adequacy ratio of the company was 20% at the end of March 2011.NBFCs are increasingly playing a critical role in making financial services accessible to a wider set of India’s population; thus, they have emerged as significant players in the retail finance space. One can expect NBFCs to grow at a healthy pace, despite macroeconomic concerns like inflation and interest rate increases which may affect disposable incomes and consumer credit behaviour. After three years of competing in an environment of single-digit nominal growth that was not much higher than inflation, retail finance business is estimated to have grown by over 29% in FY10-11.BFL reported revenues of Rs491.68 crore for the quarter ended September 2011, a jump of 53% over Rs295.64 crore in the previous corresponding quarter. Operating profit in the reporting quarter was Rs130.66 crore compared to Rs75.13 crore in the year-ago period, a leap of 74%. Net profit for the second quarter of the current fiscal was Rs87.37 crore over Rs52.77 crore in the September 2010 quarter, up a huge 65.57%. Operating profit margin (OPM) for the September quarter was 27%.Average revenues and operating profit growth for the past five quarters were 52% and 131%, respectively, while average OPM for the same period was 27%. For FY10-11, the company reported a net profit of Rs246.96 crore. Its return on net worth was 18%. The company’s board has announced a dividend of 100% (Rs10 per share) for FY10-11.Based on the annualised results for the September quarter, the company’s market-cap to revenue was 1.29 times and market-cap to operating profit was 4.84 times. Boosted by healthy financials, the stock is a good buy at the current price.

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