The Bajaj Finance share gained half a percent intraday on October 6 after reporting strong business update for the September quarter.
Bajaj Finance customer franchise was up 19.7 percent to 52.8 million as of September 30, 2021 from 44.1 million a year ago. It signed up 2.4 million customers in the second quarter of 2021-22 as against 1.2 million in the previous corresponding period. New loans booked during the period under review increased to 6.3 million from 3.6 million in Q2 FY21.
Assets under management (AUM) grew 21.74 percent and stood at approximately Rs 166,900 crore as of September 30, 2021 as compared to Rs 137,090 crore as of September 30, 2020. The company said that the AUM in Q2 FY22, adjusted for IPO financing receivable grew by approximately Rs 10,600 crore.
Bajaj Finance's deposit book grew to Rs 28,700 crore from Rs 21,669 crore in the last one year.
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According to a research report by Motilal Oswal, with the addition of 2.4 million customers, Bajaj Finance customer franchise has grown to 52.8 million - up 4.7 percent on-quarter and 19.7 percent on-year. New loans booked were up 37 percent to 6.3 million as against 3.6 million YoY and were back to pre-Covid levels.
The share of new customer loans to overall loan originations remained largely consistent at 38 percent - a 41 percent rise over the first quarter this year, suggesting no major change in risk appetite. This ratio had declined to 30 percent in the first quarter of 2020-21 after the pandemic broke out.
Deposits recorded a healthy sequential growth of 2.7 percent and were up 33 percent YoY to Rs 287 billion. Capital-to-risk weighted assets ratio (CRAR) remained healthy at 27.7 percent. Bajaj Finance still has the best capital adequacy among large NBFCs. Around 5 percent QoQ growth in reported AUM suggests disbursement volumes were encouraging.
The Q2 FY22 business update seems to suggest that there has been a rapid normalisation across business segments and this trajectory would continue in the second half of the current financial year as well, with RoA/RoE likely to rebound to 3.8 percent/18.2 percent.
Research firm Credit Suisse has maintained its neutral call on the stock and has raised target to Rs 7,500 per share. The firm reported a steady recovery in growth and asset quality, while mortgage yields were under pressure due to competition, according to a CNBC-TV18 quoting the company.
The research firm expects pricing pressure in mortgages and expects it to meet its credit cost guidance of 2.5 percent.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.