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Informist, Friday, Jan. 24, 2025

 

NEW DELHI – Bajaj Finance Ltd. is expected to report a 14.6% year-on-year rise in its net profit for the December quarter, driven by strong growth in assets under management, although a rise in cost of funds might lead to a sequential decline in margins.

 

Bajaj Finance will announce its quarterly results on Wednesday. Shares of the non-bank lender were up 0.2% at INR 7,461.00 on the National Stock Exchange at 1245 IST on Friday.

 

According to the average of the estimates of eight brokerages, Bajaj Finance's consolidated bottom line is seen increasing to INR 41.72 billion in Oct-Dec, with net interest income expected to rise 27.4% on year to INR 97.52 billion. The lender informed exchanges earlier this month that its assets under management were up 28% on year at INR 3.98 trillion as on Dec. 31, growing INR 241.00 billion in the December quarter. As on Sept. 30, Bajaj Finance's assets under management were at INR 3.74 trillion, up 29% on year.

 

While the net profit is seen growing solidly, Bajaj Finance's net interest margin in Oct-Dec may edge lower, with brokerages estimating a sequential decline of about 5-15 basis points from 9.7% in Jul-Sept due to a slight rise in the cost of funds, which was up 3 bps on quarter at 7.97% in the second quarter of 2024-25 (Apr-Mar). The company had said while detailing its Jul-Sept results that it estimated cost of funds to have peaked.

 

Nirmal Bang Equities Pvt Ltd, which has a 'hold' rating on Bajaj Finance with a target price of INR 7,200, expects a "stabilising trend" in margins as it also thinks the cost of funds may have peaked. However, "the pivot towards secured segment is likely to put pressure on NIMs," the brokerage said in a pre-earnings report.

 

"The company's leverage analysis basis Apr-Jun bureau data suggests that customers having three or more live unsecured loans are showing higher propensity to default and lower collection efficiencies. The company is further tightening its underwriting norms for such customers across all products," Bajaj Finance had said in October.

 

On the asset quality front, analysts see some deterioration in Oct-Dec, leading to credit costs rising 10-15 bps from Jul-Sept. At the time of detailing its last set of numbers, Bajaj Finance had raised its guidance for net loan loss to average assets under finance to 2.05% for FY25 from 1.75-1.85%, although the second half of the year was projected to see an improvement. Loan losses and provisions, which stood at INR 19.09 billion in Jul-Sept, are seen increasing about 10% sequentially in Oct-Dec.

 

Following are the Oct-Dec earnings estimates for Bajaj Finance based on reports from eight brokerage firms in descending order of the estimate of net profit:

 

Brokerage	Net interest income (in INR million)	Net profit (in INR million)
Kotak Institutional Equities	93,766.00	42,948.00
Nirmal Bang Equities Pvt Ltd	109,574.00	42,753.00
Anand Rathi Share and Stock Brokers Ltd	110,546.00	41,941.00
Nomura Equity Research	93,200.00	41,700.00
Axis Securities Ltd	93,610.00	41,590.00
Sharekhan Ltd	93,530.00	41,490.00
Motilal Oswal Financial Services Ltd	93,311.00	41,069.00
JM Financial Institutional Securities Pvt Ltd	92,631.00	40,246.00
AVERAGE	97,521.00	41,717.13

 

End

 

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

 

Reported by Siddharth Upasani

Edited by Avishek Dutta

 

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