On 30 June 2019, Bajaj Finance Limited (NSE:BAJFINANCE) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with earnings growth rate expected to be 31% next year, which is within range of the past five-year average earnings growth of 30%. With trailing-twelve-month net income at current levels of ₹40b, we should see this rise to ₹52b in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Bajaj Finance in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Bajaj Finance going to perform in the near future?
The 20 analysts covering BAJFINANCE view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of BAJFINANCE's earnings growth over these next few years.
By 2022, BAJFINANCE's earnings should reach ₹81b, from current levels of ₹40b, resulting in an annual growth rate of 22%. EPS reaches ₹150.33 in the final year of forecast compared to the current ₹69.33 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 34% to 33% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Bajaj Finance, I've compiled three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Bajaj Finance worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Bajaj Finance is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bajaj Finance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.