February 15, 2024
Top 10 Stock Bajaj Finance Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Bajaj Finance – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Bajaj Finance is listed as a top 10 stock on February 15, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 28 (28% performer), Obermatt assesses an overall hold recommendation for Bajaj Finance on February 15, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Consumer Finance |
| Index | BSE Sensex, CNX Nifty 50 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Bajaj Finance Hold
| 360 METRICS | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 21 |
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| 360° VIEW | ||||||||
| 360° VIEW | 28 |
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ANALYSIS: With an Obermatt 360° View of 28 (better than 28% compared with alternatives), overall professional sentiment and financial characteristics for the stock Bajaj Finance are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Bajaj Finance. The consolidated Growth Rank has a good rank of 83, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 83% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 65 which means that the company has a financing structure that is safer than 65% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 5 which means that the share price of Bajaj Finance is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 95% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 21, which means that professional investors are more pessimistic about the stock than for 79% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 28, Bajaj Finance is worse than 72% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 83), and the company is safely financed (Safety Rank of 65). However, professional market sentiment is low(Sentiment Rank of 21). The negative market view on Bajaj Finance may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Bajaj Finance compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Bajaj Finance negative
ANALYSIS: With an Obermatt Sentiment Rank of 21 (better than 21% compared with alternatives), overall professional sentiment and engagement for the stock Bajaj Finance is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Bajaj Finance. Analyst Opinions are at a rank of 73 (better than 73% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 10, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Bajaj Finance. The Professional Investors rank is also low at 40, meaning that professional investors hold less stock in this company than in 60% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 20, which means that the current professional news and professional social networks are critical of this company (more negative news than for 80% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 21 (less encouraging than 79% compared with investment alternatives), Bajaj Finance has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Bajaj Finance Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 5 (worse than 95% compared with alternatives), Bajaj Finance shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Bajaj Finance. Price-to-Sales is 11 which means that the stock price compared with what market professionals expect for future profits is higher than 89% of comparable companies, indicating a low value concerning Bajaj Finance's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 9, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Bajaj Finance. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 15 and Dividend Yield, which is lower than 84% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 5, is a sell recommendation based on Bajaj Finance's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Bajaj Finance? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Bajaj Finance? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Bajaj Finance may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Bajaj Finance Growth Momentum high
| GROWTH METRICS | February 15, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 94 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 69 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 100 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 27 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 83 |
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ANALYSIS: With an Obermatt Growth Rank of 83 (better than 83% compared with alternatives) for 2024, Bajaj Finance shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Bajaj Finance. Sales Growth has a value of 94 which means that currently professionals expect the company to grow more than 94% of its competitors. Profit Growth with a value of 69 and Capital Growth with a rank of 100 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 27, which means that stock returns have recently been below 73% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 83, is a buy recommendation for growth and momentum investors. Bajaj Finance has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Bajaj Finance, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: Bajaj Finance Debt Financing Safety above-average
| SAFETY METRICS | February 15, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 34 |
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| REFINANCING | ||||||||
| REFINANCING | 40 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 90 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company Bajaj Finance has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Bajaj Finance is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Bajaj Finance. Liquidity is at 90, meaning the company generates more profit to service its debt than 90% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 40, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 60% of its competitors. Leverage is also high at a rank of 34, which means that the company has an above-average debt-to-equity ratio. It has more debt than 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), Bajaj Finance has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Bajaj Finance Above-Average Financial Performance
| COMBINED PERFORMANCE | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 90 |
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| COMBINED | ||||||||
| COMBINED | 56 |
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ANALYSIS: With an Obermatt Combined Rank of 56 (better than 56% compared with investment alternatives), Bajaj Finance (Consumer Finance, India) shares have above-average financial characteristics compared with similar stocks. Shares of Bajaj Finance are low in value (priced high) with a consolidated Value Rank of 5 (worse than 95% of alternatives). But they show above-average growth (Growth Rank of 83) and are safely financed (Safety Rank of 65, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 56, is a buy recommendation based on Bajaj Finance's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Bajaj Finance exhibits low value (Obermatt Value Rank of 5), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 83). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 65) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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