16 Oct 2023 , 10:44 AM
Result date: October 17, 2023
Recommendation: Buy
Target price: Rs. 9,200
Bajaj Finance has reported highest ever sequential growth in assets under management (AUM) of 7.5% (up 33% over the year-ago quarter) in a seasonally weak quarter along with strong new customer acquisition (3.6 million – second highest in its history).
Margin compression (10 basis points sequentially) due to higher cost of funds is expected to result in slightly slower NII growth of 30% YoY (up 7% sequentially). Analysts at IIFL Capital Services expect credit costs to inch up to 165 basis points (up 12 basis points sequentially) partially offset by lower opex (C/I: -15 basis points sequentially) as benefits of operating leverage play out.
Adjusted for tax rate normalization, Bajaj Finance should deliver earnings growth of 27% over the year-ago quarter and 5% sequentially. The company could report ROA (% of AUM) of 5.1%.
The company could post 22% sequential growth in Profit After Tax (PAT) while this metric could decline by 15% over the year-ago quarter.
Important management insights to watch out for:
Rs. Billion | September 2023 estimates |
YoY change |
QoQ change |
NII (Ex-assignment income) |
17.1 |
13% |
5% |
Net operating income |
17.5 |
14% |
5% |
PPOP |
10.4 |
21% |
5% |
Profit After Tax |
4.3 |
(15)% |
22% |
Source: IIFL Research
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