Home / Markets / Stock Markets /  Bajaj twins stock dives nearly 10% in 3-day selloff. Should you invest?

Three days ago, NBFC giant Bajaj Finance enjoyed over 6,600 mark on stock exchanges, while its parent Bajaj Finserv held above 1,500 levels. But by end of Friday's trading session, Bajaj Finance has now lost its psychological 6,000 mark, while Bajaj Finserv is a couple of rupees over the 1,400 level. Notably, the Bajaj twins have nosedived by 8.5% to 9.5% on Dalal Street in a 3-days selloff. These two stocks emerged as the top bears and were among the major movers of markets this week. Why? The sharp selling in Bajaj twins can be attributed to Bajaj Finance's lower-than-estimated AUM growth in Q3FY23.

On Friday, Bajaj Finance stock tumbled below its 6,000 mark to end at 5,980.60 apiece down by 119.25 apiece or 1.95% on BSE. During the day, the stock touched an intraday low of 5,941 apiece.

Meanwhile, Bajaj Finserv stock finished at 1,429.90 apiece lower by 38.65 or 2.63% on BSE. The stock was near its intraday low of 1,423.10 apiece.

These two stocks were among the top bears on BSE during Friday's session.

As of January 6th, Bajaj Finance is the 14th largest company in terms of market share with a valuation of over 3.62 lakh crore, while Bajaj Finserv holds the 25th rank with a market cap of 2,27,756.68 crore.

These two Bajaj stocks had a volatile week from January 2nd to 6th. Except for January 3rd, Bajaj Finance was in red for the remainder of the week. While Bajaj Finserv witnessed buying on 2nd and 3rd of this month but nosedived from the 4th of January.

Both the stocks have recorded three consecutive day selloffs. From January 4-6, Bajaj Finance stock tumbled by 625.55 or 9.5%, while Bajaj Finserv has plunged by 133.35 or 8.5%.

Q3FY23 data:

The drastic downside in Bajaj twins comes after Bajaj Finance's provisional data for December 2022 quarter under which AUM growth was below analysts' estimates quarter-on-quarter. Later, Bajaj Finserv also announced the performance of its life insurance and general insurance subsidiaries.

Bajaj Finance:

The NBFC major recorded assets under management (AUM) growth of 27% in Q3FY23 to approximately 230,850 crore compared to 181,250 crore in Q3 a year ago. Sequentially, the growth was around 5.7%.

New loans booked in Q3FY23 were the highest ever at 7.8 million versus 7.4 million in Q3FY22 --- that means the year-on-year rise was only 0.4 million.

Further, customers franchise stood at 66 million as compared to 55.4 million in Q3FY22. Bajaj Finance said it recorded highest ever quarterly increase in its customer franchise of 3.1 million in Q3 FY23.

Meanwhile, deposits stood at approximately 43,000 crore in Q3FY23 versus 30,481 crore in Q3FY22 --- registering a growth of 41%. Further, Bajaj Finance continues to remain well capitalized with a capital adequacy ratio (CRAR) of 25.1% as of December 31, 2022. Also, the company's liquidity position remains strong with a net surplus of 12,750 crore as of December 31, 2022.

Bajaj Allianz Life Insurance:

As per Bajaj Finserv's regulatory filing, Bajaj Allianz Life Insurance posted an individual single premium of 65.06 crore in Q3FY23 and 415.81 crore for 9MFY23. While individual non-single premiums stood at 525.40 crore in Q3FY23 and at 3,180.25 crore in 9MFY23.

The group single premium of the life insurer was at 232.55 crore in Q3FY23 and overall 3,335.32 crore in 9MFY23. Further, the group yearly renewable premium came in at 105.78 crore in Q3FY23 and overall at 509.56 crore in 9MFY23.

Overall, the life insurer's business premiums stood at 928.79 crore in Q3FY23 and 7,440.94 crore in 9M of FY23.

Bajaj Allianz General Insurance:

In another filing, Bajaj Finserv revealed that Bajaj Allianz General Insurance recorded a gross direct premium underwritten of 1,209.25 crore in the quarter that ended December 31, 2022.

For the nine months period of FY23, the gross direct premium underwritten stood at 11,608.60 crore.

Should you invest in the Bajaj twins?

In its Q3FY23 preview report dated January 6th, Prabhudas Lilladher on Bajaj Finance said, as per "per the company’s business update, AUM growth in Q3’23 was strong at 5.7% QoQ (marginally below our expectation of 6.5%). Customer franchise as of 31st Dec-22 was 66.0 million (+19.1% YoY/+4.9% QoQ). New customers for Q3’23 stood at 3.1 million (+19.2% QoQ). Both these parameters have continued to show strength and the company has managed to better the run rate achieved in Q2’23."

Also, the brokerage's report added, the company's deposit momentum was also strong and showed a 9.1% QoQ growth, at a time when there is intense competition for deposits between Banks and NBFCs.

Further, it said, the omnichannel platform will provide a fully-integrated, seamless experience for customers to navigate between online and offline channels in a smooth manner and enable BAF to be the preferred interface for users. Full roll-out of the Omni channel platform by FY23 will provide a fully-integrated, seamless experience for customers with an improved UI/UX platform, upgraded web experience, and increased penetration of Super App.

Thereby, the brokerage's note said, Bajaj Finance has seen good traction in the non-captive two-wheeler financing business launched in July. It added, "We recommend ‘BUY’ on BAF at TP of 8,953 (TP unchanged)."

On the other hand, in its Q3 preview report, Kotak Institutional Equities has recommended 'Sell' on Bajaj Finance with a fair value of 5,800, while on Bajaj Finserv the brokerage has given 'Reduce' with a fair value of 1,475.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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