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The shares of Bajaj Finance, the lending arm of Bajaj Finserv Ltd. declined more than 5% today in the early hours of the trading session today to reach their new 52-week low of ₹ 5,355. The broader markets remained under pressure as the benchmark NIFTY50 index shed 413 points or 2.55% and was trading at 15,787 points as of 11:50 IST.

The street has been wary of the NBFC valuations lately as it tanked more than 23% in April when it announced its quarter-end results for March 2022. The performance fell short of analysts’ expectations marginally which can be attributed to one of the factors behind the decline.

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It reported an 80% increase in year-on-year (y-o-y) growth in net profit to ₹ 2,430 crores. NPAs stood at 1.6%, compared to 1.79% last year while the net interest income spiked 80% to reach ₹ 4,803 crores.

Going forward the lender’s focus will be on strengthening its payments and finance business and building its web platform. 

Analysts at Motilal Oswal commented,“ NIM is likely to compress in FY23, driven by a pressure on yields, absence of large IPO (initial public offering) financing (under new Reserve Bank of India guidelines), and expectations of an increase in borrowing cost.”

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ICICI Direct has a buy call on Bajaj Finance with a target of ₹ 9,500 suggesting an upside of 77% from its trading price of ₹ 5,370 as of 11:50 IST.

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