Home / Markets / Stock Markets /  This NBFC stock has made a journey from below 2k to over 15k in 7 years
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More than decades have passed since India received its Independence. On Monday, the citizens across the country are celebrating 75 years of Independence. The stock market is closed on this day and trading will resume from tomorrow onward. The Indian stock exchanges have also made some significant growth in the past few days. Sensex which began from 100 in 1979, crossed over the 62,000 mark last year, although, it is currently near 59,500 due to macroeconomic uncertainties. There is one specific NBFC stock that has also made substantial growth in its performance making investors wealthy. Investors who bought this NBFC stock seven years ago would probably be lakhpatis or crorepatis. However, gains depend upon the amount of investment and the number of shares bought in this listed financial services provider.

The stock would be Bajaj Group-backed Bajaj Finserv which is focused on providing services like lending, asset management, wealth management, and insurance.

On Friday, last week, Bajaj Finserv shares closed at 15,770.35 apiece up higher by 41.05 or 0.26%. It is listed under the 'A' group stock on the exchange and is also part of the Sensex 30 benchmark. The stock is among the top NBFCs with a market valuation of around 2,51,191.60 crore.

Last year, in October, the shares had touched an all-time high of 19,319.95 apiece. However, the shares corrected in the first six months of 2022s due to deep volatility in markets with bears across sectoral indices including NBFCs. However, Bajaj Finserv shares have made a strong pick up since the beginning of July.

Taking into consideration Friday's closing price, Bajaj Finserv shares have risen by more than 44% in less than two months till August 12, 2022.

But investors who bought the shares in August 2015, are most likely to be benefitting from the strong performance of Bajaj Finserv over the past seven years.

Just seven years ago, on August 12, 2015, a few days before the Independence, Bajaj Finserv shares were around 1,976.90 apiece on BSE.

Fast-forward to now, by end of August 12 this year, the shares have climbed by 13,793.45 apiece in these seven years. In percentage terms, the shares are up by 697.73% from the August 12, 2015, level.

According to Axis Direct's Returns Calculator, if an investor invested 1 lakh in Bajaj Finserv in August 2015, the shares have given returns of over 8 lakh. If the investment is 5 lakh in Bajaj Finserv shares, then the returns are nearly 41 lakh. On 10 lakh investment, the returns are over 81 lakh, and if the investment is about 15 lakh in the shares -- then the returns are around 1.2 crore.

Thereby, your gains on stock exchanges depend upon the amount invested and the number of shares bought by a listed company. Also, there are some tax rates and other charges on stocks like brokerage fees, which need to be fulfilled, and after these payments, an investor realizes their true gains on their investments.

Last month, Bajaj Finserv announced its financial performance for the quarter ending June 30, 2022 (Q1FY23).

In Q1FY23, the NBFC major posted a consolidated net profit of 1,309 crore up by 57% compared to 833 crore in the same period last year. Meanwhile, total income stood at 15,888 crore in Q1FY23 up by 14% from 13,949 crore in Q1 a year ago. Also, interest income climbed by 29.32% to 8,971.49 crore in Q1FY23 against 6,937.32 crore in Q1FY22.

Should you invest in Bajaj Finserv shares?

Analysts are still optimistic about the company, however, they have lowered their price target.

Research analysts at ICICI Direct in their note dated July 31, stated that Bajaj Finserv’s share price has grown by over~3x in the past five years (from 5308 in August 2017 to 15,007 in July 2022). The analysts have maintained a 'Buy' rating on Bajaj Finserv shares. They said, "Pick-up in lending AUM and anticipated healthy growth in insurance segment coupled with a focus on digitization remains positive. We value Finserv at ~31x FY24E EPS and lower our target price from 18,900 earlier to 17600 per share."

According to them, key triggers for future price performance of the company are:

- Digital transformation, client additions, and ambitious targets on AUM growth (25-27% CAGR to 3.8 – 4 lakh crore by FY25) to boost profitability.

- Product launch and selective product mix to aid premium growth; focus on claims and opex to aid earnings in life and general insurance business.

- Healthy traction in all businesses to drive consolidated revenue & earnings.

Bajaj Finserv is also the parent of another listed NBFC major, Bajaj Finance. While it holds majority stake in Bajaj Life Insurance and Bajaj General Insurance.

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