Q3FY24 Preview: Bajaj Finance: NII seen at ₹76.6 Billion, PAT at ₹37.5 Billion

28 Jan 2024 , 07:50 AM

Result date: January 29, 2024

Recommendation: Buy

Target price: ₹9,300

Bajaj Finance reported a strong AUM growth of 7.2% sequentially (34.7% over the year-ago quarter), along with the highest-ever new customer acquisition of 3.9mn in the December quarter. The company’s diversified product portfolio is helping supplement growth, despite the regulatory restrictions, believe analysts at IIFL Capital Services. The company’s Net Interest Income (NII), ex-assignment income could grow 29% over the year-ago quarter and 6% sequentially.

Margin compression may come in 5 basis points lower than the management guidance of 15 basis points, due to partial benefit of ₹100 Billion QIP in the quarter. Expect credit costs to inch up to 165 basis points (up 10 basis points sequentially), partially offset by lower opex (down 40 basis points C/I sequentially) on the operating leverage. 

Overall, Bajaj Finance should deliver Profit After Tax (PAT) growth of 26% over the year-ago quarter and 6% sequentially, believe analysts at IIFL Capital Services.

Important management insights to watch out for:

• Fund raising
• Sectoral NPA stress in unsecured loans
• Outlook on growth across segments
• Margin drivers

₹ Billion	December 2023 estimates	YoY change	QoQ change
NII (Ex-assignment income)	76.6	29%	6%
Net Operating Income	94.3	27%	7%
PPOP	62.6	29%	7%
Profit After Tax	37.5	26%	6%

Source: IIFL Research