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Bajaj Finance Q3 preview: NII, PAT may post double-digit YoY growth, credit costs seen flat

Ahead of Q3 earnings, Bajaj Finance stock on Wednesday tumbled to end at 5,796.90 apiece down by 1% on BSE. The company’s market cap is around 3,50,962.14 crore as of January 25th.

During Q2 of FY23, Bajaj Finance posted a 88% rise YoY in net profit to 2,781 crore, while its asset under management soared by 31% YoY to 218,366 crore. Gross NPA and Net NPA as of September-end stood at 1.17% and 0.44% respectively, as against 2.45% and 1.10% same quarter last year.

The NBFC giant has already announced its provisional data for December 2022 quarter. The company recorded assets under management (AUM) growth of 27% YoY in Q3FY23 to approximately 230,850 crore. New loans booked in Q3FY23 were the highest ever at 7.8 million versus 7.4 million in Q3FY22. 

Bajaj Finance earlier said it recorded the highest ever quarterly increase in its customer franchise of 3.1 million in Q3 FY23, taking the total customers franchise to 66 million. Meanwhile, deposits stood at approximately 43,000 crore up by 41% YoY. Also, the company’s liquidity position remains strong with a net surplus of 12,750 crore as of December 31, 2022.

What to expect from Bajaj Finance in Q3FY23?

In its preview note, Kotak Institutional Equities said, “Bajaj Finance reported 5.7% qoq loan growth (7% qoq in 2QFY23) driving 27% yoy growth. We expect NIM to compress 11 bps qoq at 10.4% (down 48 bps yoy) reflecting a rise in funding cost and higher share of mortgage costs.”

Further, Kotak’s note added, “We expect cost-to-average AUM ratio to remain high at 4.8% (4.8% in 2QFY23) due to investments in the digital channel. We pen down credit costs of 1.5% for 3QFY23E.”

Meanwhile, in its preview note, Prabhudas Lilladher expects the following for Bajaj Finance in Q3:

– Strong NII growth on the back of strong loan growth

– Strong PPOP growth on the back of a strong topline and better operating efficiency

– Marginal increase in provisions on a QoQ basis as credit cost is expected to be flat.

– PAT improvement on strong NII growth and stable credit cost

– Rural segment and mortgages to drive industry-leading loan growth

– Margins to remain stable as a marginal increase in the cost of funds to be passed on

– Asset quality to remain pristine

– Credit costs to remain flattish as collection efficiency remains high

Prabhudas expects NII to come at 5,891.3 crore for Bajaj Finance up by 24.6% YoY and 6.4% QoQ. While PAT is seen at 3,003.2 crore in Q3 higher by 41.3% YoY and 8% QoQ.

Bajaj Finance is among the top picks of Prabhudas in the financials basket. The brokerage expects the company’s omnichannel platform to provide a fully-integrated, seamless experience for customers to navigate between online and offline channels in a smooth manner and enable BAF to be the preferred interface for users. Full roll-out of omni channel platform by FY23 will provide a fully-integrated, seamless experience for customers with an improved UI/UX platform, upgraded web experience, and increased penetration of Super App. Bajaj Finance has seen good traction in the non-captive two-wheeler financing business launched in July. It has recommended ‘BUY’ on BAF at TP of 8,953 (TP unchanged).


Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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