Shares of this bluechip company slipped more than 7 percent in Friday’s trading session after multiple analysts expect lower profit growth despite the company posting robust results for Q4FY24 and FY24, i.e., for the financial quarter & year ended March 2024.
With a market capitalization of Rs 4.18 lakh crores, the stocks of Bajaj Finance Limited started their trading session on Friday at Rs 7,008.60 and currently trade at Rs 6,758.40, dipping more than 7 percent compared to the previous closing level of Rs 7,293.90 apiece.
Such sharp bearish movements in the NBFC company’s share price were observed after the company, through a recent regulatory filing with the Bombay Stock Exchange (BSE), announced its financial results for the financial quarter and year ended March 2024.
On a sequential basis, the company’s basic business indicators, viz, its operating revenues as well as after-tax profits, witnessed a decent jump in numbers with the former increasing from Rs 14,163.56 crores during Q3FY24 to Rs 14,926.21 crores during Q4FY24, and the latter, in congruence, shifting up from Rs 3,638.95 crores to Rs 3,824.53 crores.
In addition, the metrics mentioned above were reported with drastic movements with the operating revenues going up from Rs 11,364.01 crores during Q4FY23 to Rs 14,926.21 crores during Q4FY24 and the after-tax profits moving up from Rs 3,157.79 crores to Rs 3,824.53 crores keeping the timeframe the same.
Despite such movements in its prime business indicators, the company’s stock saw a deep down movement after analysts raised concerns about the company’s profit growth.
Analysts at HSBC trimmed the earnings per share (EPS) estimates of Bajaj Finance Limited by 13 to 17 percent for the coming two fiscal years on account of sustained pressure on the cost of funds, lower rural-loan mix, etc.
“Going forward, we believe funding cost pressures may persist for longer too and company’s earnings may be under pressure for some quarters,” commented the analysts at HSBC.
Historically, the company has successfully been able to maintain decent levels of profit margins as well as return ratios. The net profit margin (NPM) was reported at 28 percent during FY23, increasing from 22 percent of margins previous financial year.
In addition, the company, during FY23, reported a return on equity (RoE) of 21 percent and a return on capital employed (RoCE) of 15 percent.
According to the latest presentations, the company’s assets under management (AUM) were reported with an increase of around 34 percent at Rs 3.31 lakh crores during FY24 as against ₹ 2.47 lakh crores as of FY23.
On a contrasting note, the NBFC company’s new loan bookings were lower by approximately 0.8 mn in Q4FY24 on account of restrictions placed by the RBI on sanction and disbursal of loans under ‘Insta EMI Card’ and ‘eCOM’.
Incorporated in 1987, Bajaj Finance Limited operates as the holding company for various financial services businesses under the Bajaj Group. It serves top-tier customers by providing solutions for asset acquisition through financing. The company, through its subsidiaries, makes investments in Renewable Energy (RE).
Written by Amit Madnani
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