Bajaj Finance Q3FY22 Preview: NII seen at Rs46.7 billion, PAT at Rs21.6 billion

16 Jan 2022 , 12:42 AM

Result date: 18th January, 2022
Recommendation: Add
Target price: Rs7,760

Bajaj Finance is likely to report a good set of numbers for Q3FY22. Its assets under management jumped 26% YoY and 8% QoQ to Rs1.8 trillion amid the strong festive season, pent up demand, low interest rates and normal monsoon. The company booked 7.4 million new loans in the quarter, up from 6 million in the same quarter of the previous year.

Deposits grew 26.2% YoY to ~Rs30,000cr during the quarter.

Company is well-oiled for growth with a capital adequacy ratio (CRAR) of ~27.0% and a consolidated liquidity surplus of ~Rs14,300cr as on December 31, 2021.
Net interest margin is likely to improve, aided by rising share of high-yielding loans and moderating liquidity.

Asset quality performance will be driven by higher collection efficiencies and better repayments. In its business update for the quarter, company mentioned that transition to the new method of non-performing assets (NPA) recognition has not had any adverse impact on its NPA position.

Important management insights to watch out for:

– Details on upcoming fund raising
– Trends in credit growth and asset quality

Rs. Billion	December 2021 estimates	YoY change	QoQ change
Net Interest Income (ex-assignment income)	46.7	39.0%	8.8%
Net Operating Income	58.0	35.1%	8.7%
Pre provisioning Op. Profit	37.3	28.4%	12.9%
Profit Before Tax	29.3	88.7%	46.2%
Profit After Tax	21.6	88.5%	45.6%

Source: IIFL Research