On Tuesday, the prominent NBFC’s shares experienced a 5.2% decrease, reaching an intraday low of ₹6,806 per share. This decline occurred despite the company’s announced 22% rise in net profit and received a buy recommendation with a 38% upside from a brokerage.
Bajaj Finance shares closed at ₹6,826 per share down 5.08 percent from the previous close on the National Stock Exchange. The company has a market capitalization of ₹ 4,23,819 crore. Bajaj Finance Ltd shares have gained 13 percent in a year.
On a consolidated basis, Bajaj Finance Ltd reported an increase of net profit of 22 percent year on year from ₹2,973 crores in Q3FY23 to ₹3,639 crores in Q3FY24, Similarly, during the same time frame, revenue has increased by 31 percent from ₹10,787 crores to ₹14,161 crores.
In comparison to the previous quarter, operational revenue has increased by 6 percent from ₹13,378 crores in Q2FY24 to ₹14,161 crores in Q3FY24, Further net profit has raised by 2.5 percent from ₹3,551 crores to ₹3,639 crores. The company reported in its exchange filing.
The NBFCs AUM grew by 35% to ₹3.11 lakh crore as of December 31, 2023, from₹2.31 lakh crore as of December 31, 2022.
HSBC has assigned a buy call on Bajaj Finance with the target price set at Rs 8,900 per share, with an upside of 31%, despite the company’s third-quarter earnings falling short of estimates due to reduced fees and increased credit costs.
HSBC has lowered its earnings per share (EPS) estimates by 3-5% for FY 24-26 to account for slower loan growth and decreased fees.
Additionally, Nomura also assigned a ‘buy’ rating on the stock with a target price of Rs 8,800 per share, with an upside of 29%. Jefferies has a target price of ₹9,400 per share on the company, with an upside of 38%.
NBFC reported a Gross NPA and Net NPA of 0.95% and 0.37% respectively, as against 1.14% and 0.41 % of the corresponding quarter of the previous year. Net interest income increased by 29% in Q3 FY24 to ₹7,655 crore from ₹5,922 crore in Q3 FY23.
The company’s Net Interest margin continues to soften gradually on account of the lagged effect of the cost of funds increase, in Q3 FY24, elevated loan losses and the impact of Regulatory action have led to profit growtH being lower by approximately 5-6%. The company’s credit cost was increased despite a decline in the provision coverage ratio (PCR) and stress levels remained high in unsecured segments.
As per Motilal Oswal, Bajaj Finance’s Q3FY24 NIM (net interest margin) declined nearly 25 bps quarter-on-quarter (QoQ) to nearly 12.4 percent while the reported NIM contracted nearly 10 bps QoQ.
Written by Omkar Chitnis
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