Bajaj Finserv has got the approval nod from the Securities and Exchange Board of India (SEBI) for setting up an Asset Management Company. So what is this new business update and how does this information affected the stock price of the company. Let’s discuss it all in this short article.
Bajaj Finserv, a financial services arm of the Bajaj Group on Tuesday 24th August 2020 announced that the company has received the approval from Securities and Exchange Board of India (SEBI) for setting up an AMC. The market rejoiced greatly at this news
The Stock of Bajaj Finserv was up by around 8% on the single trading day on Tuesday 24th August 2021 on account of this news. Also, the market capitalization of the company grew up by 1.34 Lakh Cr. on Monday 23rd August 2021 to around 1.44 Lakh Cr. on Tuesday, amounting to a rise of around 10,000 Cr. in the market cap in a single day.
SEBI Nod to AMC Business:
- In the exchange filing, the company said “Accordingly, the Company would be setting up an Asset Management Company and the Trustee Company, directly or indirectly i.e., itself or through its subsidiary in accordance with applicable SEBI Regulations and other applicable laws.”
- Since the AUM business has not been set up wholly, but the market has started discounting the stock on this news. And hence this is unjustifiable.
- The other established players like UTI AMC which is having a market capitalization of around Rs. 13,000- Rs. 14,000 Cr. handles the assets worth more than Rs. 1 Lakh Cr., Nippon AMC with a Market Cap of around Rs. 25,000 Cr. have an AUM size of around Rs. 2 Lakh Cr., and lastly the largest player HDFC AMC with a market cap of above Rs. 62,000 Cr. manages the Assets of over Rs. 4 Lakh Cr.
- The addition of this new business line will add a new feather to the total business.
The movement in the stock price was completely a news-driven act. But from one angle it is a piece of positive news for the business and shareholders too. But one should wait and should look at how things develop. Hence, one should be not be driven and news only and should assess the business and other parameters as well. Do consult a financial advisor before making any investment decisions.