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Informist, Thursday, Jul. 24, 2025

 

By Sourabh Kumar

 

MUMBAI – A robust increase in Bajaj Finance Ltd.'s assets under management is expected to lift its net profit for the June quarter, according to brokerages tracking the company. However, a compression in the net interest margin may cap the on-year growth in its bottom line. Sequentially, the net profit of the company is expected to rise much slower due to a modest growth in its net interest income.

 

The company's net profit is expected to increase nearly 18% on year to INR 46.14 billion in the June quarter, according to the average of estimates by seven brokerage firms. Sequentially, the bottom line of the company is seen rising a mere 3%. The estimates for net profit ranged from INR 43.23 billion to INR 48.40 billion, with the lowest estimate from Nirmal Bang Equities Pvt. Ltd. and highest from Prabhudas Lilladher Pvt. Ltd.

 

The net interest income of the non-bank finance company is seen rising 26% on year in the June quarter to INR 105.04 billion. Sequentially, the growth is expected to be relatively slow at 7%. Anand Rathi Share and Stock Brokers Ltd. expects Bajaj Finance's net interest income to increase the most to INR 120.40 billion in the June quarter. The lowest estimate for net interest income was INR 99.57 billion by Nirmal Bang Equities.

 

The assets under management of Bajaj Finance rose 25% on year to INR 4.41 trillion as of Jun. 30, according to the provisional data from the company. The non-bank finance company booked 13.49 million new loans in the June quarter against 10.97 million in the same quarter last year.

 

The net interest margin of Bajaj Finance is expected to contract in the June quarter, which is likely to weigh on its net profit. Nirmal Bang Equities forecast the sharpest fall in the company's net interest margin, by 46 basis points on year and 36 bps on quarter, to 9.4%. Prabhudas Lilladher also expects the net interest margin to compress year-on-year, albeit by a lower 11 bps. However, it expects the margins to rise sequentially by 3 bps.

 

Further, Kotak Institutional Equities expects Bajaj Finance to make higher provisions in the June quarter, limiting the rise in its net profit. The brokerage expects provisions to rise 27% on year in the June quarter to INR 21.45 billion. Prabhudas Lilladher, on the other hand, expects an "improvement in early bucket delinquencies and stage 2 exposure, resulting in lower credit cost." 

 

Prabhudas Lilladher expects Bajaj Finance's credit cost to decline 12 bps from the previous quarter and 10 bps from last year to 2.0% in the June quarter. Kotak Institutional Equities has a similar estimate. Both Emkay Global Financial Services Ltd. and Nirmal Bang Equities provided a slightly higher estimate for credit cost at 2.1% for the latest quarter. Sharekhan Ltd. said, "credit cost is expected to moderate on a sequential basis," though it is likely to remain elevated.

 

Further, brokerages had diverse views on Bajaj Finance's cost-to-income ratio, a metric which measures the efficiency of a company in managing its expenses in relation to its income. While Nirmal Bang forecast the cost-to-income ratio to fall year-on-year, it expected the ratio to rise 83 bps on quarter to 41.1% in Apr-Jun. Prabhudas Lilladher, on the other hand, estimated the cost-to-income ratio to rise both sequentially and on year to 33.5%. Kotak Institutional Equities estimated the ratio to decline both sequentially and on a year to 32.6% in the June quarter. Bajaj Finance's cost-to-income ratio in the March quarter was 33.1%. For 2024-25 (Apr-Mar), the ratio was 33.2%.

 

Bajaj Finance is scheduled to release its earnings Thursday. Shares of the company ended up 1.7% at INR 968.30 on the National Stock Exchange Wednesday. The stock is up over 10% since the announcement of the company's March quarter results.

 

Of the 18 brokerage reports on Bajaj Finance available with Informist, 14 have a 'buy' rating on the sock with an average target price of INR 965, and the rest of the four brokerage firms have a 'hold' rating with an average target price of INR 941. 

 

Following are the Apr-Jun earnings estimates for Bajaj Finance Ltd. based on reports from seven brokerage firms in descending order by the estimate of net profit:

 

Brokerage Name	Net Interest Income (in INR million)	Net Profit (in INR million)
Prabhudas Lilladher Pvt Ltd	1,03,645.00	48,395.00
Kotak Institutional Equities	1,02,011.00	46,762.00
Anand Rathi Share and Stock Brokers Ltd	1,20,404.00	46,626.00
Sharekhan Ltd	1,02,630.00	46,350.00
Emkay Global Financial Services Ltd	1,03,714.00	46,310.00
JM Financial Institutional Securities Pvt Ltd	1,03,341.00	45,291.00
Nirmal Bang Equities Pvt Ltd	99,566.00	43,227.00
Average	1,05,044.43	46,137.29

 

 

End

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

 

Edited by Tanima Banerjee

 

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