Our 6th company in the Series of Best Stocks to Buy in India for Long Term 2021 is Bajaj Finance Ltd.
This company is good for investing purpose or not ?
Let’s start with the Company profile
Company Profile :
The company was formerly known as Bajaj Auto Finance Limited and changed its name to Bajaj Finance Limited in September 2010. The company was incorporated in 1987 and is based in Pune, India. Bajaj Finance Limited is a subsidiary of Bajaj Finserv Limited. Bajaj Finance Limited is a non-banking finance company (NBFC). The Company is engaged in lending and allied activities.
Now Let’s check the important fundamental figures of this company. This is a large cap company with Market Cap ₹4,52,857 cr. We can check more fundamental details below in depth:
Company Fundamental Detail :
PE Ratio: 106.25
Sector PE Ratio: 27.54
PE Ratio of this company is high than Sector’s PE. So it’s a Below Average PE than the peers of this company.
PB Ratio : 27.54
Sector PB Ratio:2.32PB Ratio of this company is high than Sector’s PB ratio. So it’s Below Average PB than the peers of this company.
Dividend Yield : 4.19%
Sector Dividend Yield : 1.13%
Dividend of this company is high than Sector’s dividend. So it’s Good PB than the peers of this company.
ROE: 11.7 %
ROCE: 9.51 %
ROE (Return on equity) and ROCE (Return on capital equity) is Average
According to above data, this company is looking fundamentally average. Now We’ll check the company Financially data:
Company Financial Detail
| Year | Revenue(cr.) | Profit(cr.) |
| 2021 | 26,683.05 | 4,419.82 |
| 2020 | 26,385.64 | 5,263.75 |
| 2019 | 18,500.18 | 3,994.99 |
| 2018 | 12,756.84 | 2,496.37 |
You can see the company growth clearly in the above table, in 2018 Net profit was 2,496.37 Cr. only and in 2019, It increased to 3,994.99 Cr. and in 2020, it is increased to 5,263.75 Cr.
We should check now liabilities of company also in the below table
Total Current & Non Current Liabilities
| 2021 | 2020 | 2019 | 2018 |
| 68,950.43 | 1,04,535.49 | 1,32,063.50 | 1,34,608.46 |
Liabilities of a company refers to the debt of that company. We should also aware the debt of company.
Let’s check the Free Cash flow of the company
Free Cash flow
| 2021 | 2020 | 2019 | 2018 |
| -1,190.44 | -24,919.57 | -29,459.05 | -20,700.54 |
Debt Level: BAJFINANCE’s debt to equity ratio (288%) is considered high.
Reducing Debt: BAJFINANCE’s debt to equity ratio has reduced from 506.2% to 288% over the past 5 years.
Debt Coverage: BAJFINANCE’s operating cash flow is negative, therefore debt is not well covered.
Interest Coverage: Insufficient data to determine if BAJFINANCE’s interest payments on its debt are well covered by EBIT.
Share Holding Pattern
| Promotor Holding | Foreign Institution | Mutual Fund | Other Domestic Institutions | Retail & Others | |
| Jun 2021 | 56.03% | 24.03% | 6.57% | 2.17% | 11.20% |
| Mar 2021 | 56.12% | 24.06% | 6.39% | 2.04% | 11.39% |
| Dec 2020 | 56.12% | 23.89% | 6.25% | 2.13% | 11.61% |
| Sep 2020 | 56.12% | 21.31% | 7.10% | 2.79% | 12.68% |
Above table showing there is no big change in Promotors holding which is 56.03 % in June 2021. FIIs invested in June 2021 with 24.03% and retail investor is 11.20 %.
Now We’ll check the return of the company, This company given 133% returns in last 1 year from 2020 to 25 Sep 2021.
Investment Checklist for Bajaj Finance Ltd.
- The company is currently profitable
- Earnings are forecast to grow by an average of 25.1% per year for the next 3 years
- Dividend is too low to be a concern
- Share price has been stable over the past 3 months
- The company’s earnings are high quality
- Profit margins decreased but not substantially
- They have sufficient analyst coverage
- No concerning events detected
- Shareholders have not been meaningfully diluted in the past year or recently listed
- Revenue is meaningful (₹176B)
- Market cap is meaningful (₹4,522B)
- Debt is not well covered by operating cash flow
- Significant insider selling over the past 3 months
According to its historical performance we can predict stock target.
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Entry Buying Zone : Premium members can see only
Target: Premium members can see only
Time Horizon:Premium members can see only
Risk Profile: Premium members can see only
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Entry Buying Zone : 6950 to 7050
Target: 8500 (25% Upside)
Time Horizon: 1 Year
Risk Profile: Moderate Risk (Stock is 2.29x as volatile as Nifty)
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Hope you liked Our 6th company in the Series of Best stocks to buy in India for Long term 2021. We tried to cover many important things about this company, if you think anything left to cover, you can comment us and we’ll try to cover those things also.
Disclaimer: This is an Educational Initiative and is NOT registered under any SEBI regulations. All the information that we provide is just for Educational purposes and you should consult your financial adviser before taking any investment decision. Also we do NOT provide any form of Stock Tips or Advise on stocks or portfolios. My All Trades Only Education Purpose. All trades will be at your risk. You have the responsibility of any trade or any benefit or loss