Bajaj Finance raises Rs 17,500 crore via QIP
Bajaj Finance approved a Rs 17,500 crore capital raise plan, comprising Rs 11,700 crore via QIP and Rs 5,800 crore through warrants to promoter Bajaj Finserv.
Bajaj Finance approved plans to raise up to Rs 17,500 crore. The board cleared the fundraising at its meeting on 01 October to strengthen the company's capital base ahead of growth plans.
The plan comprises a qualified institutional placement (QIP) and a preferential issue of warrants. The QIP can raise up to Rs 11,700 crore. The warrants, worth up to Rs 5,800 crore, will be issued solely to promoter and holding company Bajaj Finserv.
Under the QIP, Bajaj Finance will issue equity shares with a face value of Rs 1 each. Pricing and terms will be set later in accordance with regulations. For the warrants, at least 25 percent of the consideration is payable upon allotment. The remaining 75 percent is due when the warrants are exercised and shares are allotted. This structure follows SEBI ICDR Regulations. Shares issued upon conversion will rank equally with existing equity. Shareholder approval will be sought through an extraordinary general meeting.
UBS upgrades Bajaj Finance to Neutral with higher target
UBS turned more positive on the stock, upgrading it to Neutral from Sell. The brokerage raised its target price to Rs 1,100 from Rs 910.
UBS said Bajaj Finance has cleared its asset quality issues across unsecured products. The company is now better placed to benefit from a new cycle in unsecured lending. An increased provision coverage ratio acts as a cushion against macro headwinds. UBS expects stronger growth in higher-yielding loans to support earnings.
The brokerage sees Bajaj Finance delivering more than 30% earnings per share growth in the 2027 financial year. Growth could then slow to the high teens in FY28.
Jefferies outlines impact of capital raise on financials
Jefferies said the capital raise is slightly higher than its expectation. The move works out to about 3% of the company's market capitalization and 13% of its estimated FY27 net worth.
The firm outlined the expected financial impact.
| Metric | Impact from Capital Raise |
|---|---|
| FY28 Estimated Book Value Per Share | Lift of 8% |
| Earnings Per Share | Remain broadly flat |
| Return on Equity | Marginally lowered |
| Leverage (already fair) | 4.9 times |
| Retained Return on Equity | 17% |
Jefferies cited strong loan growth of about 23%. It also noted the staggered monetisation of Bajaj Finance’s 87% stake in Bajaj Housing Finance and a management succession due in March 2028. "BAF stays among our top picks," Jefferies said.
Bajaj Finance shows strong quarterly performance
The company's first-quarter performance underpins the improved sentiment. Bajaj Finance reported assets under management growth of 24% year-on-year. Net interest margins remained stable, unlike some peers.
Asset quality showed steady improvement. Credit costs were lower and in line with guidance. Profit beat the estimate by 5%.
Management guided for continued growth momentum. They said profit growth is running ahead of AUM growth due to cost discipline and risk management.
Foreign outflows weigh on Indian equities despite Bajaj Finance strength
The company's resilience stands out against a weak broader market. The Nifty index fell about 6% in September. Foreign investors sold $2.7 billion of Indian equities during the month.
Year-to-date foreign outflows from Indian equities have reached $26.8 billion. Shareholder approval for Bajaj Finance's capital raise will be sought through an extraordinary general meeting.
