Bajaj Finance may post strong profits in Q2 on moderate provisions and higher credit

Leading non-banking finance company Bajaj Finance is expected to see a healthy double-digit growth in the second-quarter profit with improved operating profit and a fall in provisions. Festive demand is expected to support growth in assets under management for the company and there could be a decline in credit cost for the quarter. The numbers will be released on October 26.

The stock seems to have started discounting the expected improved growth in the business as it rallied nearly 50 percent in the current financial year, much ahead of equity benchmarks, experts feel. Let's see whether the company can meet the expectations or not.

"Assets under management (AUM) is expected to grow by around 3.4 percent QoQ and 20 percent YoY on the back of strong demand in the festive season. Credit costs are expected to lower due to improved collection efficiencies and buffer provisions which, in turn, are expected to support the uncertain situation," said KRChoksey Research which expects the cost to income to be around 30 percent.

The brokerage expects improved operating profits and lower provisions to impact QoQ (up 56 percent) and YoY (up 62 percent) PAT performance, positively.