Bajaj Finance Q4 Preview: Healthy profit, NII growth seen, but margins may contract

New loans booked during the fourth quarter rose by 4% to 7.87 mm as compared to 7.56 mm, according to a recent update by the company The new loans booked during the quarter were lower on account of the restrictions placed by the RBI on the company, on sanction and disbursal of loans under ‘eCOM’ and ‘Insta EMI Card’.

The assets under management (AUM) grew by 34% to approximately Rs 3.3 lakh crore as of March 2024.

Here's what analysts expect from Bajaj Finance's Q4

Axis Securities

AUM Growth has remained healthy at 6% QoQ. Margins are likely to decline by 10bps QoQ owing to an inch-up in CoF; the C-I Ratio to remain steady. Credit costs (%) and asset quality are expected to remain broadly stable QoQ.

Key Monitorables are commentary on sustenance of growth momentum and scale-up of new products.

Motilal Oswal

Bajaj Finance is likely to report an AUM growth of 35% year-on-year. Opex is likely to remain stable with CIR at 34%. Margins are likely to contract 20 bp QoQ. Credit costs are expected to decline 5 bps quarter-on-quarter to 1.65%.

Kotak Equities

Bajaj Finance reported 6% quarter-on-quarter loan growth (7-9% quarter-on-quarter in the last four quarters), driving 34% year-on-year growth in AUM. NIM will likely contract 20 bps quarter-on-quarter, reflecting further increase in cost of funds.

We expect expense control efforts to reduce the cost-to-average AUM ratio to 4% from 4.2% in 3QFY24 and 4.4% in 4QFY23. We model a moderate increase in credit costs to 1.8% for 4QFY24 (1.4- 1.6% in the previous four quarters) as guided by management in the last earnings call.

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