Q1FY23 Preview: Bajaj Finance: Net Interest Income seen at Rs50.2 billion, PAT at Rs24.7 billion

26 Jul 2022 , 08:36 AM

Result date: 27^th July, 2022
Recommendation: Add
Target price: Rs6,860

In the June 2022 quarter, Bajaj Finance clocked in AUM (Assets Under Management) growth of 6% and 31% on a quarter-on-quarter and year-on-year basis, respectively. This metric does not include IPO financing activities of the company. New loan bookings grew 61% over the year-ago quarter. Consequently, the Net Interest Income is expected to grow 36% over the year-ago quarter and 4% sequentially.

The company’s Net Interest margin is likely to remain stable sequentially due to strong expected growth in the high-yielding consumer B2B business.

Analysts at IIFL Capital Services bake-in credit cost of 1.65%.

Sharp decline in provisions vis-à-vis the year-ago quarter and minor uptick sequentially will aid profitability of the company. Profit After Tax or PAT growth is estimated at 146% over the year-ago quarter and 2% on a sequential basis.

Important management insights to watch out for:

• Trends in AUM growth, margins
• Outlook on asset quality

(Rs billion)	June 2022 estimates	YoY change	QoQ change
Net Interest Income (ex-assignment income)	50.2	36%	4%
Net Operating Income	63.0	40%	4%
Pre Provisioning Op. Profit	40.9	31%	3%
Profit After Tax	24.7	146%	2%

Source: IIFL Research