Bajaj Finance stock price: Bajaj Finance stock could underperform in the short term

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While we remain positive in the medium to long term, the stock may underperform in the short term, said Dipan Mehta, director of Elixir Equities in this conversation. Edited excerpts:


What is the prognosis for the market? Beautiful days to come?
We are tracking global indices right now. Intuitively, we get a little cautious from this point on. I think we need a little correction or sideways movement (movement) because a lot of foam is building up in the market. I’m not comfortable with the way primary markets suck cash. The valuation of IPOs is a sign that a peak is also being created in the secondary market.

All in all, we should be prepared for some disappointments in this results season. The next 4-6 weeks could be a little tough for the stock markets.

Nifty could climb 100 to 200 points or so, but I don’t want to participate in this rally.

Bajaj Finance saw a spike in its auto finance APNs. They expect sequential loan growth for the second quarter, but at the same time they say they expect additional NPAs in the second quarter and NIMs to stabilize only in the second half.
The gains are extremely disappointing. As we and our clients are invested, we may feel the pain over the next few trading sessions. This type of postcode was not foreseen, in particular on the side of commercial vehicles. 19% is a lot more and it shows the kind of stress that is present in the books. We have positive news from Bajaj Finance regarding how their new digital initiatives are picking up and what launches have been made. I would be a little careful on Bajaj Finance. Valuations are higher and any disappointment like this could be severely punished. So I am a little cautious about the stock. Although we remain positive in the medium to long term, the stock could underperform in the short term.

Do you think that in the medium term, the outperformance of banks will now change with the return of business growth and the start of the investment cycle?
We are in earnings season and everything we have seen from Bajaj Finance and HDFC Bank means we need to be careful on the whole banking industry and NBFC. Let’s not jump at the gun. I don’t think the stock market is going anywhere right now. We have the luxury of waiting for these companies to report their numbers, analyze them and form a more informed opinion. Whether it’s SBI, HDFC, Axis, or ICICI, the best strategy is to wait and look at the numbers.

You may have some negative surprises even in SBI or ICICI, given what happened in Bajaj Finance and HDFC Bank. In the banking and NBFC space, you have to be extremely careful. Let the dust settle. Maybe give it another quarter and see if the collection efficiency has increased, if the post codes are under control, then take a call.

Stocks can rebound 5-20% but you will have a good risk / reward profile and you won’t have to deal with bad news from Wave 2. I am therefore becoming a little cautious about the banking sector as a whole. This is part of the reason why we are also a little negative on the immediate short term trend of the market.

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