After having a dream debut on stock exchanges this Monday, shares of Bajaj Finance continued to rally for two consecutive sessions but faced some pressure today as the stock was down by 2% after making a new high of Rs 188.45 around 10 am on BSE.
However, lucky IPO investors who were allotted shares via a lottery system are now sitting on hefty gains of over 150%. Ignoring concerns that the stock's valuation is too high, Bajaj Housing shares continue to witness gains, as unlucky IPO investors who failed to get allotment are still chasing the stock at higher prices.
Out of the Rs 1.20 lakh crore market cap of the company, the total free float shares that are available for trading constitute just about 12% of the company’s equity.
“This explains that about Rs 14,000-15,000 crore worth of floating stock is existing in the market. Beyond that, I think it is not available in the market. Against which every single fund probably wants to buy into the portfolio,” said Deven Chowksey, Managing Director at DRChoksey FinServ.
Chowksey explained that the company is growing at a compounded rate of growth of around 30%, which means even if today the stock is quoting at 7-7.5 times price to book value, at 30% rate of growth, if one averages it out three years forward, this is basically valued at around 3.5 times.
“So, frankly, from that perspective when you compare this company with others, it may sound a little bit more expensive even at 3.5 times price to book value three years forward. But still given the kind of diversity of the portfolio in the business model, this company assures that they are going at around 30% rate of cagr rate of growth, so they are always going to be trading at premium,” Chowksey added.
Given these facts, Deven Chowksey believes that if the market gives an opportunity to buy the stock at a lower level on any fall or any dip, that would be a right time to buy into the portfolio because though expensive, he recommends buying at a slight premium for a good quality stock in the portfolio.
Also read: Goldman-backed Aragen eyes Rs 12,000 crore as pre-IPO dose; Novo Nordisk keen
Despite high valuations, analysts believe that the company is very typically supported by the heritage of the Bajaj Group and the wealth creation that has happened inside the group, the management quality, the integrity as well as the industry that it functions into.
“What supports this company is the base being lower, a huge database that this company has and I think the trust from the investors as well as the trust from the community who sort of borrows from that is also something which would help. As I said, these are more qualitative parameters,” said Devang Mehta of Spark Private Wealth.
Mehta emphasized that it is not the right time to put anything conclusive on the table given the listing of companies like Ola Electric among a host of others which got listed in the past 7-10 months have sort of again exceeded expectations.
“It is a hold for somebody who has sort of bought allotment and somebody who wants to buy, this is a great company, good company,” Mehta added.
The broader advice to the investors remains to wait for a bit of a correction if somebody wants to get into the stock.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
However, lucky IPO investors who were allotted shares via a lottery system are now sitting on hefty gains of over 150%. Ignoring concerns that the stock's valuation is too high, Bajaj Housing shares continue to witness gains, as unlucky IPO investors who failed to get allotment are still chasing the stock at higher prices.
Out of the Rs 1.20 lakh crore market cap of the company, the total free float shares that are available for trading constitute just about 12% of the company’s equity.
“This explains that about Rs 14,000-15,000 crore worth of floating stock is existing in the market. Beyond that, I think it is not available in the market. Against which every single fund probably wants to buy into the portfolio,” said Deven Chowksey, Managing Director at DRChoksey FinServ.
Chowksey explained that the company is growing at a compounded rate of growth of around 30%, which means even if today the stock is quoting at 7-7.5 times price to book value, at 30% rate of growth, if one averages it out three years forward, this is basically valued at around 3.5 times.
“So, frankly, from that perspective when you compare this company with others, it may sound a little bit more expensive even at 3.5 times price to book value three years forward. But still given the kind of diversity of the portfolio in the business model, this company assures that they are going at around 30% rate of cagr rate of growth, so they are always going to be trading at premium,” Chowksey added.
Given these facts, Deven Chowksey believes that if the market gives an opportunity to buy the stock at a lower level on any fall or any dip, that would be a right time to buy into the portfolio because though expensive, he recommends buying at a slight premium for a good quality stock in the portfolio.
Also read: Goldman-backed Aragen eyes Rs 12,000 crore as pre-IPO dose; Novo Nordisk keen
Despite high valuations, analysts believe that the company is very typically supported by the heritage of the Bajaj Group and the wealth creation that has happened inside the group, the management quality, the integrity as well as the industry that it functions into.
“What supports this company is the base being lower, a huge database that this company has and I think the trust from the investors as well as the trust from the community who sort of borrows from that is also something which would help. As I said, these are more qualitative parameters,” said Devang Mehta of Spark Private Wealth.
Mehta emphasized that it is not the right time to put anything conclusive on the table given the listing of companies like Ola Electric among a host of others which got listed in the past 7-10 months have sort of again exceeded expectations.
“It is a hold for somebody who has sort of bought allotment and somebody who wants to buy, this is a great company, good company,” Mehta added.
The broader advice to the investors remains to wait for a bit of a correction if somebody wants to get into the stock.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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