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Informist, Friday, Jul 19, 2024

 

By Richard Fargose

 

MUMBAI – Bajaj Finance's consolidated net profit for Apr-Jun is seen rising 17.3% on year to 40.33 bln rupees on the back of strong growth in assets under management, according to the average of the estimates of eight brokerage firms. Sequentially, the net profit is seen rising 5.5%. The estimates for net profit are in the range of 38.10-42.17 bln rupees.

 

The company is scheduled to detail its Apr-Jun earnings on Tuesday. Shares of Bajaj Finance today closed 2.5% lower at 6,932.30 rupees on the National Stock Exchange.

 

As per provisional figures reported to exchanges, the company's assets under management grew 31% on year. As of Jun 30, the assets under management were ar 3.54 trln rupees, against 2.7 trln rupees a year ago. Bajaj Finance's customer franchise grew by 4.47 mln during Apr-Jun.

 

Emkay Global Financial Services Ltd expects a marginal improvement in the company's overall net interest margin and fees, led by removal of the Reserve Bank of India's ban on two of its key customer acquisition products, 'eCOM' and 'Insta EMI Card'.

 

New loans saw a rise of 10% in Apr-Jun at 10.97 mln. A year ago, the company's new loans were at 9.94 mln. This follows the Reserve Bank of India lifting restrictions on the non-banking finance company's sanction and disbursal of loans under 'eCOM' and 'Insta EMI Card' and issuance of EMI cards in early May.

 

In Jan-Mar, despite hiking rates by 20-30 bps across portfolios, NIMs saw a compression due to higher cost of borrowings. Despite increasing rates across all portfolios by 20-30 basis points in Oct-Dec, the company’s net interest margin moderated 21 bps in Jan-Mar due to changes in the assets under management composition.

 

Kotak Institutional Equities said the net interest margin is likely to remain stable at 10% as a seasonal increase in yields offsets the rise in the cost of funds. The lender's net interest income is expected to rise 32.2% on year to 88.82 bln rupees, according to the average of the eight estimates.

 

Brokerage houses expect the lender's credit costs to increase marginally in Apr-Jun.

 

Emkay Global Financial Services Ltd sees the gross non-performing asset ratio rising slightly to 0.90% from 0.85% a quarter ago.

 

As on Mar 31, the gross non-performing asset ratio had improved to 0.85% from 0.94% reported a year ago, and the net NPA ratio was at 0.37%, higher than 0.34% a year ago.

 

The company's long-term target is to keep the gross NPA ratio in the range of 1.2-1.4%.

 

"We expect credit costs to remain elevated (1.75-1.8%) as its two-wheeler/three-wheeler portfolio is still normalising back to pre-Covid levels," Nirmal Bang Equities Pvt Ltd said in the report.

 

The management's outlook on loan growth and commentary on asset quality metrics in the unsecured portfolio would be keenly monitored, brokerage firms said.

 

Following are the Apr-Jun earnings estimates for Bajaj Finance based on reports compiled by Informist from eight brokerage houses:

 

Brokerage firm	Net interest income (in mln rupees)	Net profit (in mln rupees)
Anand Rathi Share and Stock Brokers	1,01,084	42,174
Axis Securities Ltd	85,280	39,480
Emkay Global Financial Services Ltd	85,490	41,100
Kotak Institutional Equities	85,683	40,588
Motilal Oswal Financial Services Ltd	84,455	39,469
Nirmal Bang Equities Pvt Ltd	1,00,193	41,930
Nomura Equity Research	83,400	38,100
Sharekhan Ltd	84,980	39,810
Average	88,821	40,331

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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