Bajaj Finance Share Price: Bajaj Finance revealed some noteworthy news on October 17. They said that their consolidated net profit for the current fiscal year’s July–September quarter was a healthy Rs 3,551 crore. Even more amazing is that this is a notable 28% growth over the same quarter last year, which surprised many people pleasantly and beyond expectations.
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Bajaj Finance Share Price: A Profit Surge
Bajaj Finance recently reported its consolidated net profit for the July-September quarter, and it’s impressive. Their net profit reached an incredible Rs 3,551 crore, a significant 28% rise over the same time previous year. Many people are interested in this rise.
The Role of Net Interest Income for Bajaj Finance Share Price
A significant contributor to this surge in net profit is improved net interest income (NII). This non-banking financing company’s (NBFC) net interest rate increased by 26% year-on-year to Rs 8,845 crore during the reporting quarter. Comparing this to the previous year’s NII of Rs 7,002 crore, the growth is evident.
Bajaj Finance Share Price Loans on the Rise
Another noteworthy aspect of Bajaj Finance’s performance is the remarkable increase in the number of loans booked during the quarter. From 6.76 million to 8.53 million during the same time last year, this profit climbed by 26%. This is a significant indicator of their continued growth.
Bajaj Finance Share Price: NIM and Cost of Funds
A deeper examination of the figures exposes certain subtleties.Net interest margins (NIM) compressed by 14 basis points (Bps) on a quarterly basis. This is explained by the fact that during the reporting quarter, the company’s cost of financing increased. In Q2, the cost of funds for Bajaj Finance rose to 7.67 percent, a 6 bps increase over Q1FY24. This cost factor is vital in understanding the overall picture.
Bajaj Finance Share Price: Asset Quality and Provisioning
A paramount facet of a financial institution lies in the quality of its assets. Notably, Bajaj Finance’s asset quality underwent a positive evolution during the second quarter of the current fiscal year. The company’s net non-performing assets (NPA) was a pitiful 0.31%, while its gross non-performing assets (NPA) were an even 0.91%.These statistics unveil a substantial shift from the prior year, where they were positioned at 1.17% and 0.44%, respectively.
This encouraging development says a lot about the company’s steadfast stability. But in the second quarter of the current fiscal year, the company’s credit losses and provisions increased significantly. From Rs 734 crore at this same point in the previous year, the amount shot up an incredible growth to Rs 1,077 crore. This increase was partially due to a management and macroeconomic overlay of Rs 740 crore.
Bajaj Finance Share Price: Deposits and AUM
On the deposit front, Bajaj Finance witnessed significant growth. Deposits on a consolidated basis rose 39% to Rs 54,800 crore, compared with Rs 39,422 crore from last year.The net deposit growth for Q2 was Rs 4,877 crore, contributing 21 percent to consolidated borrowings as of September 30, 2023. Moreover, the company’s assets under management (AUM) showed robust growth, surging by 33% to reach Rs 2.9 lakh crore in Q2 from Rs 2.1 lakh crore in the year-ago period. This is a testament to their successful financial operations.
Bajaj Finance Share Price: Subsidiaries on the Rise
Bajaj Finance’s subsidiaries have also shown strong performance. Bajaj Housing Finance reported a remarkable 47% increase in net profit to Rs 451 crore in the July-September quarter. This growth was driven by increased Net Interest Income (NII). In the same quarter, Bajaj Financial Securities saw its net profit rise to Rs 13 crore, a significant jump from just 1 crore in the corresponding period last year. These results are indicative of the strength of Bajaj Finance’s subsidiaries.
Bajaj Finance Share Price: Analyst Projections and recommendations
Looking ahead, analysts are optimistic about Bajaj Finance’s future. For the July–September quarter, they project a 30% year-over-year growth in net profit, reaching Rs 3,626 crore.A significant driver for this projection is the company’s stable asset quality and higher loan growth. Analysts have shared their views on Bajaj Finance. Jefferies considers it one of their top picks among NBFCs, citing AUM growth above their estimates. Morgan Stanley has given an ‘overweight’ rating and raised the target price. In contrast, Citi has a ‘neutral’ stance due to stress seen in the B2C rural segment.
Challenges on the Horizon for Bajaj Finance Share Price
Nevertheless, there are obstacles that need to be taken into consideration. The escalating expenses of loans and the amplified cost of capital are projected to decrease net interest margins (NIMs) by 30 basis points, both in comparison to the previous year and in a sequential manner. Additionally, higher write-offs may push up credit costs. The management has guided credit costs at 155-165 basis points for the rest of the financial year.
Bajaj Finance Share Price Market Response
During the period of July to September, Bajaj Finance witnessed a significant increase in its shares, with a surge of 9%. This growth exceeded the performance of the benchmark Sensex, which only recorded a 2% rise. Despite facing various challenges, Bajaj Finance has managed to outperform the market during this time frame. Business Update In their Q2 business update, Bajaj Finance highlighted the increase in the number of loans booked and a significant growth in deposits. Their liquidity position remains strong, with a consolidated net liquidity surplus of Rs 11,400 crore at the end of September.
Bajaj Finance Share Price: Conclusion
Bajaj Finance’s Q2 results are a mixed bag of impressive profits, growth in loans and deposits, and improved asset quality, along with the challenges posed by higher costs. Although the company faces headwinds, it remains an important player in the financial sector with promising prospects.
Bajaj Finance Share Price: The FAQs
What is net interest income (NII) and why is it important for Bajaj Finance’s performance?
NII is the difference between interest earned by the company and interest expended. It’s a key metric for Bajaj Finance as it reflects their core earnings from lending operations.
What contributed to Bajaj Finance’s rise in net profit during?
Bajaj Finance’s net profit surge was primarily driven by improved net interest income, new loans booked, and enhanced asset quality.
How did Bajaj Finance’s asset quality improve, and why is it significant?
Bajaj Finance’s asset quality improved as their gross and net non-performing assets (NPA) percentages decreased. This is a positive sign as it indicates their loans in their portfolio.
What challenges does Bajaj Finance face for the rest of the financial year?
Bajaj Finance anticipates challenges such as compressed net interest margins (NIMs) due to increased cost of funds and higher credit costs, which could impact their profitability.
What are the analyst recommendations for Bajaj Finance’s stock?
Analysts have varying views on Bajaj Finance. Some consider it a top pick among NBFCs, while others have a more neutral stance, influenced by factors like rural segment stress.
Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.