Shares of Bajaj Finance zoomed 3.83 percent to emerge as the top Nifty gainer in morning trade on Wednesday after the company reported strong growth in new loans and AUM for the fourth quarter of 2022-23.
Sharing its business updates for the quarter, the non-banking finance company said its customer franchises increased by 3.1 million to stand at 69.1 million as of March 31, 2023.
“The Company recorded highest ever increase in its customer franchise of 11.5 million in FY23,” it said in a regulatory filing on April 4.
New loans booked during Q4 FY23 grew by 20 percent to 7.6 million as compared to 6.3 million in Q4 FY22.
Bajaj Finance booked the highest-ever new loans of 29.6 million in FY23.
Core AUM grew by 29 percent to approximately Rs 247,350 crore as of 31 March 2023 as compared to Rs 192,087 crore (AUM excluding short-term IPO financing receivable of Rs 5,365 crore) as of March 31, 2022.
AUM in Q4 FY23 grew by about Rs 16,500 crore.
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Consolidated net liquidity surplus stood at approximately Rs 11,850 crore as of March-end, the filing said, adding the company’s liquidity position remains strong.
Bajaj Finance said it continues to remain well capitalised with a capital adequacy ratio (CRAR) of 24.9 percent as of March 31, 2023.
Deposit book stood at around Rs 44,650 crore as of March 31, 2023, as compared to Rs 30,800 crore on March 31, 2022, a YoY growth of 45 percent.
At 10 am, the stock was trading 3.83 percent up at Rs 5,934.15 on the NSE.
Brokerage opinions
CLSA has upgraded the stock to ‘Outperform’ from ‘Underperform’ on the back of its Q4 business updates.
“Surprisingly, sequential loan growth was faster in 4Q than in 3Q (a festival quarter). Importantly, after a couple of quarters of single-digit volume growth, the company delivered 21 percent loan volume growth in 4Q. While loan growth remains lower than pre-Covid levels, it is better than what we anticipated in our December 2021 initiation report,” it said in a note.
With the stock trading at 20x FY25 PE, CLSA sees favourable risk-reward and scope for multiple expansion if growth remains robust.
The brokerage raised its target price from Rs 6,000 to Rs 6,600.
In a recent report, Morgan Stanley retained its positive outlook on the stock with target of Rs 8,000 per share.
According to the research firm, competitive intensity in mortgages has eased relative to the third quarter and growth has picked up. B2B sales finance business has also picked up after slowing post-festive season, it said.
“The company is confident of achieving guidance of 26-27 percent with potential 1-2 percent from new initiatives and continues to prioritise margin over growth. The management guided to sharper increases in Q4FY23 and FY24,” it added.
Also Read: Morgan Stanley retains ‘overweight’ stance on Bajaj Finance, expects 40% upside
Domestic brokerage Geojit said Bajaj Finance has tailwinds like strong cash flows and steady asset quality.
“Robust AUM growth momentum, PAN India presence, strong distribution network and healthy asset quality auger well for the company’s performance in future,” it said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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