Shares of Bajaj Finserv and its subsidiary Bajaj Finance today surged to fresh 52-week highs buoyed by strong earnings. At day’s highs, Bajaj Finserv shares soared 5% to 8,021 while Bajaj Finance surged 6% to 3,298 amid a spurt in volumes in both the counters. Bajaj Finance on Thursday reported a 50% jump in standalone net profit to 1,114 crore for March 2019 quarter. The company had registered a net profit of 743 crore in the corresponding quarter a year ago. Its total income during the quarter rose to 4,887.76 crore from 3,424.99 crore in the year-ago period. Gross non-performing assets (NPAs) and net NPAs stood at 1.54% and 0.63%, respectively, at the end of March 2019.

Bajaj Finserv reported a consolidated net profit of 839 crore in March quarter vs 637 crore last year. March quarter consolidated total revenue from operations rose to 12,994 crore in Q4 as against 9,055 crore in the year-earlier period.

JM Financial said in a report said that despite broader sector headwinds, Bajaj Finance reported strong growth across different fronts: new customers, AUM growth and margin expansion. Asset quality trends also remained stable, it said. "Bajaj Finance remains well positioned to deliver earnings CAGR of 36% over FY19-21E driven by a) strong customer acquisition engine, b) expanding rural footprint with a diversified product offering, c) scale-up of the housing finance subsidiary (targeting an 8-9% market share from the current 1.5%), d) robust fee income generation and e) superior asset quality," added JM Financial, which has a buy rating on Bajaj Finserv with a target price of 3,600.

However, some analysts warn about the headwinds from a broader consumption slowdown. “The risks of an eventual consumer cycle are completely ignored by the Street even as Bajaj is actively working on minimizing the impact of the same," says a report from Kotak Institutional Equities, which has a “sell" rating on the stock.

“The current valuations do not reflect any risk of cyclicality in its business, nor slowdown in growth. We continue to find valuations expensive and will await better entry points," it added.

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