Title: – Relationship of Bajaj Finance with nifty 50
Author -: Bhakti Ashok Todankar (MMS First Year, Roll No -: 0222122)
Kohinoor Business School, Kurla.
Introduction -:
Bajaj Auto Finance Limited, founded in 1987, was initially a non-banking financial company focusing on two and three-wheeler finance. After 11 years, the company launched its first public equity share and was listed on the Bombay Stock Exchange and National Stock Exchange of India. In the 20th century, Bajaj Auto Finance diversified into consumer durables finance, business, and property loans. In 2006, its assets reached ₹52,332 crore, and in 2010, its registered name changed to Bajaj Finance Limited. By 2015, BFL was the first in the industry to establish Disaster Recovery data centers for customer acquisition, loan processing, and servicing. By 2020, BFL began using data analytics and big data tools to maintain its competitive position. Bajaj Finance has been working with RBL Bank and DBS Bank to issue co-branded credit cards, but plans to introduce credit card products by the first quarter of 2023. In January 2023, the company released its long-term strategy, which includes launching a loan against property business for micro, small, and medium-sized enterprises (MSME) customers. The company has 294 consumer branches and 497 rural locations, with over 33,000 distribution points and 1,50,000 stores.
Objective -: To calculate the beta of Bajaj Finance and find out significance.
Views and Reviews: –
Rajeev Jain -: Bajaj Finance Ltd is taking pre-emptive steps to stay out of trouble due to the level of consumer leverage and personal loan growth in the financial system. The company is seeing increasing leverage in the rural B2C segment, with 98.01% loans in the Stage 1 category as of 30 June. The lender is tightening its credit standards and filtration criteria to flag potential risk. The company is monitoring aggregate leverage of consumers, secured leverage, and unsecured leverage to ensure it stays out of trouble but remains in the game. Bajaj Finance reported a 32% year-on-year rise in consolidated net profit to ₹3,437 crore for the three months ended June, owing to higher net interest income. The lender expects AUM growth to be 29-31% in FY24. The company added 3.84 million new customers to the franchise and is confident of adding 12-13 million in the current financial year. The company has decided to put the entire portfolio in Manipur under moratorium due to widespread ethnic violence in the state.
Data Collections: – Data is taken from 01-06-2022 to 31-07-2023. It has been downloaded from the NSE site, then Friday’s closing price was sorted and weekly returns of Nifty (i.e. X) and Jubilant Foodworks (i.e. Y) were calculated.
Data Analysis: – Equation “Y=0.0170+1.317 X”
(tstat = 0.0371)
n = 50, R2 = 0.3100 F= 21.5669
The above equation shows the relationship between the closing price of Nifty 50 (x) and the closing price of Bajaj Finance. (y) the positive sign means a positive relationship meaning if “x” rises “y” rises and vice versa. If “x” rises by 1 unit, “y” rises by 1.317, “n” means there are 50 observations. The figure in bracket is plus stat for B, The t-stat for b is 5.734, which means b is statistically significant at 5% level. R2 0.3100 is means 31% of y is explained by x, balance 69% is error due to the variables which are not in model. As the calculated value of F =21.5669 is more than the tabulated F (F 0.05,1DF,49DF) = 4.043, the overall model is statistically significant at the 5% level.
So overall the model is statistically significant at the 5% level.
Conclusion:
As Beta is 0.0000002 which is less than 1, the share is good for long term