Bajaj Finance Q4 results preview: Profit may surge 23-30% on strong NII growth, stable credit cost

Bajaj Finance is likely to report a 23-30 per cent year-on-year rise in net profit for the March quarter on similar jump in net interest income. Net interest margin (NIM) is expected to come in excess of 13 per cent, with cost of funds stabilising to offset a rise in lower yielding books, analysts said.

The NBFC in its quarterly business update suggested that its assets under management grew at 7.1 per cent sequentially after a slight slowdown in December quarter. Customer franchise as of March 31 was up 20 per cent YoY at 6.91 crore while new customers for the quarter stood at 31 lakhs. Besides, the NBFC clocked its highest ever increase in its customer franchise of 1.15 crore in FY23, surpassing its target of 1.1 crore.

Thanks to strong NII growth and stable credit cost, brokerage Prabhudas Lilladher said Bajaj Finance may report profit at Rs 3,272 crore, up 33.7 per cent. It sees NII for the quarter rising 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 sees profit at Rs 3,078 crore, up 27.2 per cent YoY. It sees loan book growth at 27 per cent YoY and expects loan volumes to 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.

Shares of Bajaj Finance have declined 7 per cent year-to-date against a 0.7 per cent fall in the Nifty Financial Services index.

Also read: Nestle, SBI Life, Maruti Suzuki: How to trade these stocks amid results buzz?

Also read: Maruti Suzuki Q4 results preview: Profit may surge 50%, margin expansion likely