Bajaj Finance launches QIP; floor price set at Rs. 7,533.81/share
Bajaj Finance launched its qualified institutional placement (QIP) issue today, setting the floor price at Rs. 7,533.81 per share. The company may provide a discount of up to 5% on this floor price. This QIP issue follows the company's board approval plans to raise Rs. 10,000 crore, which includes Rs. 8,800 crore through QIP and Rs. 1,200 crore via convertible warrants. The funds raised will likely aid Bajaj Finance's growth plans and bolster its capital adequacy ratio.
Financial performance and capital adequacy
In Q2 FY24, Bajaj Finance posted a consolidated profit after tax of Rs. 3,550.8 crore, marking a 28% increase compared to Q2 FY23. The company's revenue from operations surged by 34% YoY to Rs. 13,378 crore. As of the end of September, Bajaj Finance had a consolidated net liquidity surplus of approximately Rs. 11,400 crore and a capital adequacy ratio of 23.19%, with tier-1 capital at 21.88%.
Acquisition of Pennant Technologies
Bajaj Finance recently disclosed its acquisition of up to a 26% stake in Pennant Technologies Pvt. Ltd., a firm that offers business-driven technology services and software products primarily for the banking and financial services industry. This acquisition aligns with Bajaj Finance's growth strategy and is expected to boost its technological capabilities within the financial services sector.
Possible competition from Jio Financial Services
Although Bajaj Finance has not specified the rationale behind raising $1 billion (roughly Rs. 8,324.77 crore) in capital despite possessing solid liquidity buffers, analysts speculate that the company is accumulating capital to counter potential competition from Jio Financial Services's entry. The fundraising through QIP and convertible warrants is predicted to further solidify Bajaj Finance's market position and help maintain its competitive advantage. Bajaj Finance's stock price surged over 2% to settle at Rs. 7,562.05 apiece on NSE.
