With mutual funds asking for their money back, most NBFCs have had to scale down their portfolios. However, market players said that investors are still bullish on top rung NBFC stocks.
India's largest consumer durables and lifestyle financier Bajaj Finance has initiated exploratory talks with merchant bankers to raise funds through a qualified institutional placement (QIP), multiple sources with knowledge of the matter told Moneycontrol. The company's scrip has rallied nearly 40 percent over the past six months, compared to an 11 percent rise in the Sensex during the same period.
"They are planning to raise around Rs 3,000 crore through a QIP; talks are at an early stage,” said one of the sources. Non-banking finance companies in general are finding the going tough as the default by IL&FS and its group companies in September last year has made mutual funds wary of lending to NBFCs. With mutual funds asking for their money back, most NBFCs have had to scale down their portfolios. However, market players said that investors are still bullish on top rung NBFC stocks.
“In the past, all the fund raising efforts by the company have been oversubscribed and a lot of foreign investors have expressed interest,so the final issue size may vary,” the source said.
In September 2017, Bajaj Finance had launched a Rs 4,500 crore QIP at a floor price of Rs 1,771.90 per share.
"This is a good time for Bajaj Finance to raise money as its peers are under pressure and the company has performed well despite the IL&FS liquidity crisis. The company can use the funds to strengthen its position in other segments like small and medium enterprises," added a second source.
"The equity markets have seen a rally in both pre and post-elections as fears of an unstable government at the Centre is out of the way. We expect secondary market activity to pick up and many potential QIPs to come to market. With respect to sectors, I expect a lot of buzz in deal activities in the financial services space," says Anuj Kapoor, MD and Head of Investment Banking, UBS India.
For the quarter ended March 2019, Bajaj Finance posted its highest ever quarterly profit at Rs 1,1176 crore because of lower provisions. This was 57 percent higher than the profit figure during the same period the year before. Net interest income (NII) was up 50 percent at Rs 3,395 crore from Rs 2,265 crore in Q4 FY18. Net NPA of the company was at 0.63 percent while Gross NPA stood at 1.54 percent, QoQ. The assets under management (AUM) as of March 31 was up 41 percent at Rs 1.16 lakh crore. Moneycontrol is awaiting an email response to a query sent to Bajaj Finance and will update this article as soon as we hear from the company.
