In response to the impending competition from "Reliance Industries Jio Financial", Bajaj Finance, a leading non-banking financial company (NBFC) in India, is bolstering its capital. The firm announced on Thursday that it is raising Rs 10,000 crore ($1.34 billion) through a share sale. The fundraising initiative comprises equity divestment to institutional investors and its holding company, "Bajaj Finserv".
Shewta Daptardar, an analyst at Elara Capital, suggests that Bajaj's move is a strategic preparation for future growth and competition. With a capital adequacy of 23%, which is over twice the mandate set by the Reserve Bank of India for top-tier NBFCs, Bajaj appears to be fortifying its position in the market.
Bajaj's strategic move aligns with the InvestingPro Tips which indicate the company as a prominent player in the Consumer Finance industry, having maintained dividend payments for 23 consecutive years. The company's stockholders have enjoyed high returns on book equity, demonstrating the company's strong financial performance. For more insights like these, visit InvestingPro where there are 13 more tips available.
Jio Financial's recent partnership with global investment management corporation BlackRock (NYSE:BLK) has been interpreted as a signal of intensifying competition in the sector. Sanjiv Bajaj, Bajaj Finserv's chairman, has acknowledged the implications of Jio’s entry into financial services.
The fundraising announcement comes amidst an increasingly competitive landscape in India's financial sector. As more players like Jio Financial enter the market, established companies such as Bajaj Finance are taking steps to secure their position and maintain growth.
InvestingPro's real-time metrics for Bajaj Finance show an adjusted P/E ratio of 68.11 and a Price / Book ratio of 10.41 as of LTM2023.Q3. These figures indicate that the company is trading at a high earnings multiple and a high Price / Book multiple. The company's operating income margin stands at 39.37%, suggesting strong profitability. According to InvestingPro, Bajaj Finance's fair value is estimated at 5346.77, implying potential for future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.