The market capitalization of Bajaj Finance has exceeded that of the country’s largest bank State Bank of India (SBI). With this it has become the fifth most valued company in the BFSI (Banking, Financial Services and Insurance) segment. The market cap of Bajaj Finance is Rs 2.32 lakh crore and that of SBI is Rs 2.28 lakh crore.
Due to the recent fall in the share price of SBI, its market capitalization has decreased.
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Bajaj Finance’s business was not affected even during the difficult times for the NBFC sector. Its stock has gained about 1,341 percent in the last five years. SBI’s stock rose only 5.62 per cent during this period.
Analysts say that investors are more interested in Bajaj Finance stock. The good asset quality and profitability of the company are the major reasons behind this.
The share of Bajaj Finance has given a return of 36,257 percent in the last 10 years. If an investor had invested Rs 1 lakh in the company’s shares at the end of 2009, now that amount has increased to about Rs 3.64 crore.
However, at the same time, analysts have also cautioned against the high valuation of Bajaj Finance. The company’s stock is trading at around 9 times the estimated price to book value for FY20. In comparison, SBI’s share is at less than 1 percent.
Despite the low valuation of SBI, experts have feared further decline in this stock. The asset quality of the bank has deteriorated and its net interest margin has also been affected.
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