Bajaj Finance Q3 Preview: Based on the average of four brokerages, Bajaj Finance is predicted to increase its net interest income by 26% year over year to Rs 9,344 crore. Analysts predict that stable asset quality and robust AUM (assets under management) growth would propel earnings. When Bajaj Finance, a non-banking financial company (NBFC), releases its results for the December quarter on January 29, all eyes will be on the company. Six brokerages surveyed predicted that the lender’s consolidated net profit would increase by 25% year over year to Rs 3,716 crore.
On January 3, Bajaj Finance announced tentative data for the December quarter AUM. Following a good festive season, the company’s AUM crossed the Rs 3-lakh-crore mark for the first time in the previous quarter, increasing by 35 percent year on year.
According to the Q3 statement, its deposit book increased by 35% to Rs 58,000 crore. During the quarter, it originated 98.6 lakh new loans, representing a 26% year-on-year increase.
Margins and costs of funds
Motilal Oswal Financial Services predicts a sequential fall in margins and spreads of approximately 25 and 15 basis points, respectively. Credit costs are predicted to increase by ~10 basis points QoQ to ~1.7 percent. A basis point represents a minute unit of measurement in finance, equivalent to one-hundredth of a percentage point. – Bajaj Finance Q3 Preview
Meanwhile, the cost-to-income ratio is likely to hold stable. KRChoksey Research analysts estimate the cost-to-income ratio will be 34.2 percent, up from 34.7 percent in Q3 FY22.
Factors to watch
The Reserve Bank of India requested in November 2023 that Bajaj Finance cease providing new loans via its “eCOM” and “Insta EMI Card” due to non-compliance with norms regarding digital lending. It’s critical to keep an eye out for management remarks regarding the same. The third-quarter results from Bajaj Finance also follow the RBI’s warning against unsecured lending and the increase in risk-weighting for consumer credit. Analysts are optimistic about Bajaj Finance’s liquidity situation due to its successful Rs 10,000 crore fundraising; but, as bank lending to NBFCs slows down, it will be important to follow management’s comments regarding potential changes to the company’s borrowing mix.
In addition, the Street will keep an eye on how newly launched items are growing and whether any market niches are exhibiting symptoms of stress.
Performance of stocks
Bajaj Finance shares dropped more than 8% during the December quarter, although the Nifty increased more than 11%. The stock has lost 2.8% of its value thus far in 2024, while the Nifty has lost 1.8%.
The stock ended the day of January 26 at Rs 7,091 on the NSE, flat.
