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Bajaj Finance sulks despite good Q4 show: What should investors do now?

Bajaj Finance’s net interest income (NII) surged 30 percent y-o-y to Rs 6,068 crore in the March quarter.

April 27, 2022 / 10:05 AM IST
Bajaj Finance

Bajaj Finance

 
 
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Bajaj Finance share price shed over 5 percent in the early trade on April 27 after the company reported its March quarter earnings.

Bajaj Finance on April 26 reported a 79.7 percent year-on-year (y-o-y) rise in consolidated net profit to Rs 2,420 crore due to higher net interest income and lower provisions.

Bajaj Finance’s net interest income (NII) surged 30 percent y-o-y to Rs 6,068 crore in the March quarter.

The other large component of its revenues was in the form of fees and other income of Rs 1,164 crore, up 51 percent from the same period last year.

The total AUM of the company grew 29 percent to Rs 1.97 trillion as on 31 March 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.

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Here is what brokerages have to say about stock and the company post March quarter earnings:

CLSA

Broking house CLSA has kept the 'sell' rating on the stock and cut the target price to Rs 6,000 per share and also cut FY23/24 EPS by 8 percent/9 percent.

The PAT missed our estimate by 9 percent on account of a 6 percent NII miss. The NII miss driven by 100 bps QoQ yield compression, despite low interest reversals.

The core AUM growth was in line with our forecast at 6 percent 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, reported CNBC-TV18.

Sharekhan

The company stands poised to deliver 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 auto financing cycle, pick up in mortgage lending business, and lower estimates of credit cost supported by a strong balance sheet.

Further, undergoing digital transformation is likely to bode well for its growth objectives going ahead along with operational efficiencies. BAF is one of the most diversified NBFCs with a wide range of product offerings with the management planning to be 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.

Motilal Oswal

4QFY22 was a healthy quarter for Bajaj Finance, with all-round momentum across key business parameters. Customer acquisitions and trajectory in new loans remain strong. This momentum will only get stronger with its digital ecosystem: app, web platform, and full-stack payment offerings.

We expect BAF to deliver a healthy AUM CAGR of 25 percent over the next two years. We expect it to contain credit costs 1.7 percent in FY23. Even though the management has guided that it will prioritize margin over loan growth, NIM compression is likely in FY23, as levers like normalization in excess liquidity and borrowing costs have largely played out. The competitive landscape also continues to remain aggressive.

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.

The company 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).

At 9:17am, Bajaj Finance was quoting at Rs 6,937.65, down Rs 303.05, or 4.19 percent on the BSE.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Moneycontrol News
first published: Apr 27, 2022 09:30 am
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