Q2FY23 Preview: Bajaj Finance: NII seen at Rs57.2 billion, PAT at Rs28.6 billion

18 Oct 2022 , 10:38 AM

Result date: 20^th October, 2022
Recommendation: Add
Target price: Rs7,900

In the September 2022 quarter, the Assets Under Management (AUM) of Bajaj Finance grew 7 sequentially and 31% over the year-ago quarter. New loan bookings were down 8.4% sequentially to 6.8 million. Consequently, the net interest income or NII is likely to grow at a robust 33% over the year-ago quarter and 9% sequentially.

The company’s Net Interest Margin or NIM could expand sequentially, due to higher yields, aided by growth in the high-yielding consumer B2B business. Cost-to-income ratio is likely to remain in the 35-36% range.

Analysts at IIFL Capital Services bake-in moderation in credit cost to 1.45% (1.65% in Q1FY23).

Hefty reduction in provisions could drive a 93% growth in Profit After Tax (PAT) over the year-ago quarter.

Important management insights to watch out for:

• Credit demand across key segments
• Asset quality trends
• Margin outlook

Rs. Billion	September 2022 estimates	QoQ change	YoY change
Net Interest Income (Ex assignment income)	57.2	9%	33%
Net Operating Income	71.3	7%	34%
Pre-Provisioning Operating Profit	45.6	7%	38%
Provisions	7.0	(7)%	(46)%
Profit After Tax	28.6	10%	93%
AUM	2,184	7%	31%
Borrowings	1,877	9%	29%

Source: Company, IIFL Research