July 6, 2023
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 July 06, 2023 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 42 (42% performer), Obermatt assesses an overall hold recommendation for Bajaj Finance on July 06, 2023.
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 | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 5 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 99 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 36 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 41 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 42 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 42 (better than 42% 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 three out of four indicators below average for Bajaj Finance. The consolidated Growth Rank has a good rank of 99, 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. It ranks higher than 99% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 5 means that the share price of Bajaj Finance is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 95% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 36, which means that the company has a riskier financing structure than 64% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 41, indicating professional investors are more pessimistic about the stock than for 59% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 42, Bajaj Finance is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 99), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 41), the company is rather risky when it comes to financing (Safety Rank of 36). 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 join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial 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 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 (even though it is lower than 50). As market sentiment is critical, 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 only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 41 (better than 41% compared with alternatives), overall professional sentiment and engagement for the stock Bajaj Finance is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and above average for Bajaj Finance. Analyst Opinions are at a rank of 35 (worse than 65% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 60 which means that stock research experts are changing their opinions for the better. In other words, they are getting more optimistic of stock investments in Bajaj Finance. Market Pulse is also positive with a rank of 51, which means that the current professional news and professional social networks are positive in their discussions about this company (more positive news than for 51% of competitors). Only professional investors tend to be absent with a Professional Investors rank of 43, which means that professional investors hold less stock in this company than in 57% of alternative investment opportunities. Pros tend to invest in other companies. But that could also be due to the size of the company. Professional investors tend to invest in XL and XXL companies. If the company is smaller than that, that fact alone may explain why there are fewer pros present. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 41 (less encouraging than 59% compared with investment alternatives), Bajaj Finance has a reputation among professional investors that is below that of its competitors. Since analysts are getting more optimistic and the professional communication channels are positive, it may be an indication of a company that has the difficult times behind it or the stocks’ value is improving. For medium to smaller companies, the positive sentiment indicators outshine the negative. ...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 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% 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 3, 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 3 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
ANALYSIS: With an Obermatt Growth Rank of 99 (better than 99% compared with alternatives) for 2023, 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 four indicators above average for Bajaj Finance. Sales Growth has a value of 98, which means that, currently, professionals expect the company to grow more than 98% of its competitors. The same is valid for Profit Growth with a value of 79 and for Capital Growth with 95. In addition, Stock Returns had an above-average rank value of 55, which means they have been higher than 55% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 99, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Bajaj Finance exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Bajaj Finance Debt Financing Safety below-average
| SAFETY METRICS | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 31 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 29 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 74 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 36 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 36 (better than 36% compared with alternatives), the company Bajaj Finance has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Bajaj Finance is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, 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 74, meaning the company generates more profit to service its debt than 74% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 29, 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 71% of its competitors. Leverage is also high at a rank of 31, which means that the company has an above-average debt-to-equity ratio. It has more debt than 69% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 36 (worse than 64% compared with alternatives), Bajaj Finance has a financing structure that is riskier 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 Below-Average Financial Performance
| COMBINED PERFORMANCE | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 5 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 99 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 74 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 38 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 38 (worse than 62% compared with investment alternatives), Bajaj Finance (Consumer Finance, India) shares have somewhat below-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), and are riskily financed (Safety Rank of 36, which means above-average debt burdens) but show above-average growth (Growth Rank of 99). ...read more
RECOMMENDATION: A Combined Rank of 38, is a hold recommendation based on Bajaj Finance's financial characteristics. As the company Bajaj Finance shows low value with an Obermatt Value Rank of 5 (95% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 99% of comparable companies (Obermatt Growth Rank is 99). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 36 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Bajaj Finance, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.