NII seen at Rs51.4 billion, PAT at Rs23.9 billion

Result date: 26th April, 2022
Recommendation: Add
Target price: Rs8,300

Bajaj Finance could clock in healthy growth for the March 2022 quarter. It is one of the key beneficiaries from economic recovery. The company has reported robust growth in assets under management (AUM) of 9% on a sequential basis and 29% over the year-ago quarter to Rs1.98 Trillion. After adjusting for short-term IPO financing, this metric grew 5% sequentially and 26% versus the year-ago quarter.

Consequently, its Net Interest Income (NII) growth could come in at 34%, amid strong traction in new loans.

Its Net Interest Margin could improve sequentially amid normalization of excess liquidity.

Momentum in topline and operating performance could drive a 78% jump in its profit after tax (PAT) to Rs23.9 Billion. Credit costs could also moderate owing to improvement in collections.

Important management insights to watch out for:
· Outlook on AUM growth across segments
· Trends in asset quality
· Progress on app-based ecosystem

Rs Billion March 2022 estimates QoQ changes YoY change
Net Interest Income (NII) 51.4 9% 34%
Net Operating Income 64.0 7% 37%
Pre-Provisioning Operating Profit 41.5 6% 36%
Profit After Tax (PAT) 23.9 13% 78%

Source: IIFL Research

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