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Bajaj Finance vs HDFC: Clash of Clans

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Stock

Last Updated on Feb 15, 2022 by Aradhana Gotur

Shares of HDFC have been in the red, trading near their 52-week low for quite some time now. The stock has dipped 19% last year and is the second worst-performing scrip on Nifty 50, only after Hero MotoCorp.

Today, Bajaj Finance briefly overtook Housing Development Finance Corporation (HDFC) as India’s biggest non-banking finance company (NBFC) based on market capitalisation. Bajaj Finance’s market cap touched Rs 4,17, 385 cr to beat HDFC’s Rs 4,17,076 cr.

Analysts have suggested that HDFC could continue to be under pressure on margins because of the increasing competition in the housing finance segment.


However, CLSA India has maintained its ‘outperform’ rating on the stock, expecting the NBFC to benefit from a hike in domestic interest rates and undemanding valuations.

The underperformance of its listed subsidiaries has also weighed heavily on HDFC. All of them have given negative returns in the last 12 mth. HDFC Bank, HDFC Asset Management Company, and HDFC Life Insurance have decreased 7-27% in the previous year.

However, Bajaj Finance’s pivot from traditional lending to fintech solutions has received optimism from both investors and analysts. Although the stock price nosedived over 15% from a record high due to the ongoing market correction, analysts have maintained a favourable view of Bajaj Finance.

“Valuation is not cheap – but business and earnings momentum with improving economy and technological initiatives imply that the stock will keep doing well,” brokerage firm Morgan Stanley India said in a note last month.

Aradhana Gotur
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