Bajaj Finance share price jumps 2% ahead of Q4 results, stellar PAT, NII growth expected

Bajaj Finance share price jumped 2% to hit intraday high of Rs 7,154 on the Bombay Stock Exchange (BSE) on Tuesday ahead of the company’s Q4 result announcement. The financial major is likely to report robust earnings in the quarter ended March 2022, according to analysts. Several brokerages expect the non-banking finance company to report up to 80% on-year growth in profit (PAT) and 35% increase in net interest income (NII), on the back of improved asset quality during the quarter. So far this year, Bajaj Finance share price has dropped half a per cent. However, in the past one year, the stock has rallied over 50% delivering good returns to investors.

Bajaj Finance Q4FY22 results: What Brokerages expect

Analysts at IIFL Securities expect Bajaj Finance to clock in healthy growth for the March 2022 quarter as it is one of the key beneficiaries from economic recovery. The company has reported robust growth in assets under management (AUM) of 29% over the year-ago quarter. After adjusting for short-term IPO financing, this metric grew 26% versus the year-ago quarter. Consequently, its Net Interest Income (NII) growth could come in at 34%, amid strong traction in new loans. Company’s Net Interest Margin (NIM) could improve sequentially amid normalization of excess liquidity. The brokerage estimates momentum in topline and operating performance to drive a 78% jump in its profit after tax (PAT) to Rs 2,390 crore. Credit costs could also moderate owing to improvement in collections.

YES Securities expects Bajaj Finance profit may surge around 80% on-year to Rs 2,423.9 crore, while NII may surge 33% to Rs 6,191 crore in Q4FY22. “AUM (Asset Under Management) growth at 9% quarter-on-quarter (QoQ) and 29% YoY, including short-term IPO financing receivables. NIM (Net Interest Margin) to fall sequentially on changes in AUM mix but would be higher YoY on lower CoF. Credit cost to be significantly lower on reduction in the delinquent pool and healthy provisions held across buckets,” YES Securities said. 

Brokerage firm Nirmal Bang sees the profit of Bajaj Finance growing 79% on-year to Rs 2,410.7 crore, while its NII may surge over 35% to Rs 6,121.3 crore during the March-end quarter of FY22. “We expect strong earnings performance from banks in Q4FY22, driven by improving credit growth stable margins and lower credit costs. Data suggests upturn in credit growth across segments. Within the Retail segment, Housing has continued to show sustained traction while unsecured credit has been improving sequentially,” Nirmal Bang said in a preview report.  

Axis Securities, which has the lowest projection for net profit growth of Bajaj Finance, said its AUM growth (including IPO Financing) was strong at 29% on-year, which will support top-line growth. “NIM is expected to remain stable QoQ. Cost to income ratio to inch up marginally to reflect investment in new businesses. Credit costs are expected to moderate YoY and QoQ,” the brokerage firm added.

Meanwhile, Kotak Institutional Equities estimates 67 and 32% on-year growth in profit and NII to Rs 2,255.5 crore and Rs Rs 5054.2 crore, respectively in Q4FY22. “Bajaj Finance has reported 29 % loan growth (26% excluding IPO financing) in Q4FY22E. We expect NIM to moderate 20 bps (basis points) QoQ to 10.6%, in line with seasonal trends,” the brokerage said in its preview report.