The Bajaj Finance share price, a non-banking finance firm, is projected to experience a growth in its assets under management ranging from 26 percent to 28 percent in the fiscal year commencing on April 1, 2024. This growth is expected to surpass the 34 percent growth observed in the preceding year.
Bajaj Finance share price Ltd fell sharply in Friday trading on concerns about the shadow lender’s profit growth. The stock fell 7.78 per cent to hit a daily low of Rs 6,728 from its previous close of Rs 7,293.90.
The non-banking finance company forecasts that its assets under management will grow between 26 per cent and 28 per cent in the fiscal year that began April 1, 2024, compared with the 34 per cent growth the previous year. The NBFC said its net interest margin will decline by 30-40 basis points (bps) over the next two quarters.
Bajaj Finance reported a 21% rise in profit for the fourth quarter (Q4 FY24) but mentioned that it is “cautiously optimistic” about the profit growth for FY25, which could be rather “laggy”.
In what could be called a rub-off effect, Bajaj Finance also pulled shares of its holding company, Bajaj Finserv Ltd, around 4 per cent lower.
Intermediary opinions
Brokerage Emkay said Bajaj Finance posted a good set of numbers in Q4FY24 on the back of the Reserve Bank of India (RBI) embargo on EMI and e-com cards, which impacted PBT by around 4 per cent.
Overall, we see that the company is making good progress in meeting its long-term strategic goals. To reflect Q4 developments and management guidance, we are revising our estimates slightly, resulting in a PAT change of around (3 per cent)-1 per cent in FY25E-27E; we reiterate our ‘Buy’ rating with an unchanged Mar-25E price target of Rs 9,000 per share,” he further said.
Religare Broking said the NBFC saw healthy growth in AUM (Asset Under Management), which was led by the secured loans segment. However, the margin continued to decline.
“The margin decline was primarily driven by a 10bps QoQ/47bps YoY increase in cost of funds to 7.9 percent. Going forward, management expects margins to decline by 30-40 basis points (bps) by H1 FY25. The company continues to record a growing share of secured loans in its portfolio,” he said.
“Management expects credit quality to remain intact and expects RBI to remove cap on cards. Financially, we expect NII/PPOP/PAT to grow at a CAGR of 26%/24%/25% over FY24-26E. continue to remain positive on Bajaj Finance and thus maintain Buy with a price target of Rs 8,861,” mentioned Religare.