Bajaj Finance shines like a beacon amidst the NBFC darkness

Dnyanada Kulkarni
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Bajaj Finance shines like a beacon amidst the NBFC darkness

The shares of Bajaj Finance surged 25 per cent, thereby rendering the company’s stock performance the best in the NBFC sector.

While its peers showcased a dismal stock performance owing to the mounting bad loans and liquidity crunch plaguing the sector; Bajaj Finance kept ascending at a good pace.

This is particularly heartening as the stocks of some companies in the sector have plummeted as much as an alarming 89 per cent since IL&FS defaulted on short-term borrowing in August 2018! Thus, it has endured a cash-strapped economic environment in which lenders’ distrust kept escalating.

The company’s stock has continued to soar as it showcased a growth of 36 per cent so far this year. In doing so, it even topped the benchmark BSE Sensex Index.

By diversifying its operations from lending to the consumer durables business as well as rural and medium-sized businesses, the company managed to withstand the headwinds which shook its peers. This is because it succeeded in arresting its exposure to housing finance loans and contained its bad loan ratio at a level of 1.5 per cent in contract to 8.8 per cent at Shriram Transport Finance Co. and 9.7 per cent at Mahindra Rural Housing Finance.

Their asset-light business model helped keep operating expenses down. The stock performance of Bajaj Finance is a testament to the ability of well-managed NBFCs to survive economic turmoil.

On Friday, the stock of Bajaj Finance opened at Rs. 3,587.00, and hit a high and low of Rs. 3,596.00 and Rs. 3,553.15, respectively. The stock closed at Rs. 3,563.45, down 0.53 per cent.


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