At the end of today’s trade, Bajaj Finance was closed at Rs 6,714.10, down Rs 526.45, or 7.27 percent on the NSE.
Mumbai: Bajaj Finance declared its fourth quarter March number on April 26 with a 79.7 percent year-on-year (y-o-y) growth in its consolidated net profit to Rs 2,420 crore due to higher net interest income (NII) and lower provisions.
Bajaj Finance’s net interest income (NII) surged 30% y-o-y to Rs 6,068 crore in the March quarter.
Fees and other income stood at Rs 1,164 crore up 51 percent from the same period last year comprise a major part of income for Bajaj Finance.
The total AUM of the firm grew 29 percent to Rs 1.97 trillion as on March 31st on a consolidated basis. The book of Bajaj Housing Finance Ltd stood at Rs 53,322 crore in the same period and is included in the consolidated numbers.
What brokerages have to say about stock and the company’s post-March quarter earnings:
Motilal Oswal
The Q4 numbers are healthy for Bajaj Finance, with all-around momentum across key businesses. Customer acquisitions and loan growth trajectory remain strong. Momentum to remain stronger due to its push for a digital ecosystem: app, web platform, and full-stack payment offerings.
We expect BAF to deliver a healthy AUM CAGR of 25% over the next two years. We expect it to contain credit costs of 1.7 percent in FY23. Even though the management has guided that it will focus on margin over loan growth, NIM compression is likely in FY23, as levers like normalization in excess liquidity and borrowing costs have largely played out. Aggressive growth opportunities in the competitive landscape will remain intact.
We cut our FY23/FY24 PAT estimate by 4 percent each to factor in potential NIM compression and a higher OPEX ratio of 35 percent over the next two years.
Bajaj Finance should deliver an RoA/RoE of 4.2-4.4 percent/21-22 percent over the medium term. We maintain our buy rating with a target price of Rs 8,350 per share (8x FY24E BVPS).
CLSA
Research and brokerage firm CLSA has given the ‘sell’ call on the stock with a reduced target price of Rs 6,000 per share and also cut FY23/24 EPS by 8-9 percent.
As per the CLSA, the PAT estimate was missed by about 9% percent on account of a 6 percent NII miss. The NII miss was driven by 100 bps QoQ yield compression, despite low-interest reversals.
The core AUM growth was in line with our forecast of 6% QoQ/26 percent, YoY.
The management plans to invest in a ‘web’ platform, complementing its app platform. A ‘web’ platform, will lead its C/I ratio to remain elevated at 34-35 percent.
Sharekhan
The company stands poised to give robust AUM growth of 22 percent over FY2022 through FY2024 with RoE and RoA of 22-24 percent and 4-5 percent over FY2023 and FY2024, respectively. This can be attributed to improving the auto financing cycle, growth in the mortgage lending business, and lower estimates of credit cost supported by a strong balance sheet.
However, adopting digital transformation is likely to augur well for its growth objectives going forward along with operational efficiencies. BAF is one of the most diversified NBFCs with a wide range of product offerings with the management vision to become a digital company by FY2023.
The company has the ability to demonstrate high credit growth in the new credit cycle, aided by its strong cross-sell franchise and robust risk management framework. Hence, we maintain our buy rating on BAF with a price target (PT) of Rs 9,097.
Numbers are in sync with broad expectations of the markets and in the coming days, the stock will trade to its all-time high.
Read more: Reasons to grow your savings with a Bajaj Finance Fixed Deposit
