Portfolio

52-Week Blockbuster: Bajaj Finance

M.V.S. Santosh Kumar | Updated on November 15, 2017 Published on May 26, 2012

Bajaj Finance stock has significantly bettered the returns of broader market indices, thanks to good performance in its consumer finance business. The stock benefitted from its consumer focus which was not impacted as much by the slowdown as other segments.

The company has been reaping the fruits of restructuring done in 2008. It has widened its canvas from financing Baja Auto's vehicles to other areas such as financing of consumer durables, mortgages, construction equipment, vendor financing and SME lending. Currently, two wheeler financing accounts for a fifth of the loan book as compared to 50 per cent in 2008-09.

Diversification into new businesses led to the loan book growing at rapid pace over the last few years. The growth was 73 per cent during the year ended March 2012. The net profits grew at 64.6 per cent. The return on equity, as a consequence of rising leverage, improved to 23.5 per cent for the year, making it one of the best in the non-banking finance space.

The net interest margin at 6.8 per cent for the fiscal year 2012, in spite of moderation, continues to be attractive. The gross NPA ratio as of March was 1.16 per cent down from seven per cent in 2007-08 fiscal. The net NPA was 0.12 per cent.

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