Pune-based non-banking financial company Bajaj Finance will be announcing its financial results for the December quarter on January 29, Monday. According to analysts, the lender’s consolidated net profit is anticipated to experience a significant 25 percent year-on-year growth, reaching ₹3,716 crore.
Brokerages further anticipates a 26 percent year-on-year (YoY) increase in net interest income to reach ₹9,344 crore, led by stable asset quality and robust growth in assets under management (AUM), foreseeing that these factors will be key drivers of earnings.
On January 3, Bajaj Finance released provisional figures for the Assets Under Management (AUM) for the December quarter. Fueled by a robust festive season, the company’s AUM surpassed the significant milestone of ₹3 lakh crore for the first time in the previous quarter, reflecting a remarkable year-on-year surge of 35 percent.
According to the Q3 update, Bajaj Finance experienced a noteworthy expansion in its deposit book, witnessing a growth of 35 percent, reaching ₹58,000 crore. Notably, during the quarter, the company approved 98.6 lakh new loans, showcasing a substantial year-on-year growth of 26 percent.
Brokerage firm Kotak Institutional Equities said that Bajaj Finance will continue to deliver 7-8% qoq loan growth, adding, “We expect overall momentum of disbursements to remain strong. While festive demand was tad weak, expansion in footprint and diversification in new segments over the last few months will drive disbursements. Unsecured loans will likely see some slowdown, mostly from business originated through partnerships. High base in non- affordable housing loans led to yoy decline in disbursements for last four quarters, the base gets favorable from 3QFY24.”
The firm further added, “ We expect moderate ~25 bps increase in cost of borrowings for most; rise may be higher for NBFCs that don’t have PSL refinance. The impact of rise may be reflected from next quarter; bank loans comprise about 24-65% of overall borrowings (Exhibit 37), and hence borrowing cost may inch up marginally 10-15 bps.”
Simultaneously, the cost-to-income ratio is anticipated to remain stable. Analysts from KRChoksey Research have projected the cost-to-income ratio to be 34.2 percent, as compared to 34.7 percent in the third quarter of the fiscal year 2022.
The release of Bajaj Finance’s Q3 results coincides with the Reserve Bank of India’s (RBI) advisory on unsecured lending and the heightened risk-weightage for consumer credit.
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Despite analysts expressing confidence in Bajaj Finance’s liquidity stance following a successful ₹10,000 crore fundraising initiative, close attention should be paid to the management’s insights into the prospective shifts in Bajaj Finance’s borrowing composition, particularly as conventional bank lending to NBFCs experiences deceleration.
Furthermore, market observers will keenly observe the management commentary regarding the trajectory of new product performance and any indications of stress in specific segments. This scrutiny is crucial for gauging the resilience and adaptability of Bajaj Finance in the evolving financial landscape.ead
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Published: 28 Jan 2024, 02:57 PM IST