Bajaj Finance shares fall ahead of Q4 results. Stock price target, key expectations & more

Bajaj Finance shares were trading lower in Wednesday's trade ahead of its March quarter results. The stock was trading half-a-per cent lower at Rs 6,049.55 in the afternoon trade. Analysts were largely expecting the NBFC to clock 23-34 per cent year-on-year rise in the bottom line for the March quarter on similar surge in net interest income (NII). Net interest margin (NIM) is expected to come in around 13.2 per cent. Analysts felt that a stable cost of funds may offset a rise in low-yielding books.

Ahead of its quarterly earnings, the stock has an average price target of Rs 7,731, as per publicly available data with Trendlyne, which suggests a 27.92 per cent potential upside for the stock. That said a recently stock initiation report by Ambit Capital assigned a ‘Sell’ rating to the stock.

This is what Bajaj Finance said in its business update earlier this month:

Prabhudas Lilladher said Bajaj Finance may report 33.7 per cent YoY jump in profit at Rs 3,272 crore, thanks to strong NII growth and stable credit cost. The brokerage sees NII for the quarter jumping 29.5 per cent YoY to Rs 7,890 crore, thanks to strong loan growth.

Pre-provision operating profit (PPoP) is seen rising 31.1 per cent YoY to Rs 5,236 crore, led by strong top line and better operating efficiency. Net interest margin is seen at 13.2 per cent against 12.9 per cent YoY. Credit cost is seen at 1.4 per cent. Gross non-performing assets is expected to come in at 1.13 per cent.

"Number of customer additions was flat QoQ at 31 lakh against 31.4 lakh. Higher ticket size boosted AUM. Accordingly, NII growth is expected to surge 30 per cent YoY to Rs 7,893 crore. NIM is expected to remain stable with cost of funds stabilising to setoff rise in lower yielding books. Provisions to be at Rs 874 crore. With C/I ratio under control, PAT estimates to increase 26 per cent YoY and 2 per cent QoQ to Rs 3,037 crore," it said.

Phillip Capital expects profit at Rs 3,078 crore, up 27.2 per cent YoY. It sees loan book growth at 27 per cent YoY. Phillip Capital said loan volumes could be higher on a sequential basis. It is factoring in an increase in cost of funds and said an improving collections will be tailwind for asset quality.

Elara Securities sees profit for Bajaj Finance at Rs 2,962 crore, up 22 per cent. Funding cost spike may impact NII traction, yet YoY momentum could be strong on the back of healthy AUM, it said. Controlled opex and better other income may aid PPoP, it said. Sequential provisions, it said, are expected to spike up.

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