Shares of Bajaj Finance have lost nearly 11 per cent of its value in the last four sessions. From its 52-week high level, it is down nearly 23 per cent, signaling that it is in a bear grip.
The broker believes the company will sustain high growth by monetising network expansion and ramp-up of digital platforms. It sees loan-growth led 27 per cent CAGR in profit over FY23-25 with return on asset (RoA) of 4.6 per cent and return on equity (RoE) of 23 per cent.
Bajaj Finance is currently valued at 37 times FY23 PE and 7.7 times adjusted PB, which are at significant premium to lenders and its past average, implying that its superior growth and profitability are perfectly priced, Jefferies argued.
The stock is a proven multibagger and has delivered 6 fold returns in the last five years. Jefferies has now set target price at Rs 7,200, which means a potential upside of 15 per cent from prevailing prices.
However, in the short term, the weakness may continue.
Bajaj Finance has been hovering slightly below the 200-SMA since 3-4 sessions and on Friday, the fresh round of selling began in the stock as we witnessed a breakdown from previous important swing lows.
“Similar sort of negative development is visible in the ‘RSI-Smoothened’ oscillator on the weekly time frame chart; this does not augur well for the bulls. Hence, traders can look to sell for a near term target of Rs 6,300. The stop loss can be placed at Rs 6,700,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.