Bajaj Finance Q1 results | What analysts say on guidance, new products

BAJAJ FINANCE

Bajaj Finance reported a 32.4 percent rise in its consolidated net profit, at Rs 3,436.89 crore, in Q1FY24 on July 26, from Rs 2,596 crore in the corresponding quarter a year ago.

A Moneycontrol poll of five brokerages had predicted a net profit of Rs 3,287 crore.

In the April-June 2023 quarter, the gross non-performing asset (NPA) ratio of the company stood at 0.87 percent, compared to 0.94 percent a quarter ago, and 1.25 percent in the year-ago period.

The net NPA ratio of the NBFC was reported at 0.31 percent in the quarter, as against 0.34 percent a quarter ago and 0.51 percent a year ago.

If you want to know more what brokerage firms and analysts said on the reported numbers and guidance, here is an explainer.

What helped the net profit?

On a consolidated basis, net profit rose 32.4 percent and on a standalone basis, it rose 33 percent on the year, according to a company press release.

HDFC Securities Institutional Equities, in its report, said that the healthy growth came on the back of higher-than-expected growth in assets under management (AUM), customer additions and new loans booked.

Bajaj Finance has given long-term guidance of 23-24 percent growth in consolidated net profit.

Also read: Bajaj Finance ups long-term guidance but margins, credit costs are a concern

What is the guidance on AUM?

Bajaj Finance has given consolidated long-term guidance on AUM in the 25-27 percent range.

Similarly, Motilal Oswal, in its report, said that the compounded annual growth rate (CAGR) in AUM and PAT of the NBFC will be around 29 percent and 26 percent, respectively, over FY23-FY25.

JM Financial estimated a 29 percent AUM CAGR over FY23-25, with continued momentum across existing products and acceleration of newer products.

Which are the products the company launched in FY23 and FY24?

According to the investor presentation of the company, product launches included new car financing, emerging corporate lending, microfinance and tractor financing in FY24.

Similarly, in the previous financial year, the company launched DBS Co-Branded Credit Card and Acquiring Merchant QR.

An HDFC Securities report said that the company, as part of a medium-term strategy, is increasing its focus on multi-channel customer acquisition and cross-sell existing and new products.

Also read: Bajaj Finserv Q1 net profit up 48% on customer franchise growth

Which are the companies that have reduced holdings in Bajaj Finance?

Among the top 20 investors, Axis Long Term Equity Fund, Axis Bluechip Fund, and New Horizon Opportunities Master Fund have reduced their holdings in the company.

According to VK Vijayakumar, chief investment strategist at Geojit Financial Services, there is a view that Bajaj Finance is overvalued. “Some fund managers may be switching to relatively cheaper financials,” he said.

According to the investor presentation of the company, New Horizon Opportunities Master Fund reduced 0.16 percent of holdings from 0.59 percent as on June 30, 2022 to 0.43 percent as on June 30.

Axis Bluechip Fund reduced holdings by 0.14 percent to 0.64 percent as on June 30.

Similarly, Axis Mutual Fund Trustee Limited A/C and Axis Mutual Fund A/C Axis Long Term Equity Fund have offloaded 0.03 percent holdings to 0.70 percent.