Bajaj Finance Q1 Results Review - Navigating Stress In B2C; Credit Costs Elevated: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.Bajaj Finance Ltd.’s Q1 FY25 reported profit after tax grew 14% YoY to ~Rs 39.1 billion (in line). Net interest income grew 25% YOY to ~Rs 83.6 billion (in line). Non-interest income stood at ~Rs 20.5 billion (+21% QoQ and +22% YoY) due to the resumption of EMI card sourcing and one-off recovery from written-off pool of loans of Rs 450 million.Bajaj Finance’s Q1 FY25 NIM contracted ~23 basis points QoQ to ~9.8%. Out of this, ~13 bp was on account of rise in cost of fund and ~10bp due to change in assets under management composition.AUM growth in Q1 was supported by mortgages, commercial (ex LAS), SME, and new product segments such as cars and loan-against-property. Higher growth in the secured product segments will likely keep yields under pressure in the near term. The management guided that the change in the AUM mix is expected to stabilize by October 2024, which will result in stable NIMs. We estimate NIM of 9.9%/10% in FY25/FY26.We cut our FY26 PAT estimate by ~3% to factor in higher steady-state normalized credit costs. We estimate a CAGR of ~27%/24% in AUM/PAT over FY24-FY26 and expect Bajaj Finance to deliver return on asset/return on equity of ~4.2%/22% in FY26. Upside risks: Stronger AUM growth versus its guidance of ~26-28%; andthe situation improving in the B2C business, resulting in lower-than-guided credit costs for FY25. .Click on the attachment to read the full report:.Bajaj Finance Q1 Results Review - Credit Cost Key Monitorable: Yes Securities.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Bajaj Finance Q1 Results Review - Navigating Stress In B2C; Credit Costs Elevated: Motilal Oswal

Despite a healthy PAT compound annual growth rate of ~24% over FY24-FY26E and RoA/RoE of 4.2%/22% in FY26E, the brokerage sees limited upside catalysts.

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP

Bajaj Finance Q1 Results Review - Navigating Stress In B2C; Credit Costs Elevated: Motilal Oswal

Despite a healthy PAT compound annual growth rate of ~24% over FY24-FY26E and RoA/RoE of 4.2%/22% in FY26E, the brokerage sees limited upside catalysts.

Choose a plan

Follow Us

DOWNLOAD THE APP