Bajaj Finance Q3 preview: Bottomline likely to fall by 25%, margins may be under pressure

NEW DELHI: Risk aversion policy adopted by Bajaj Finance is likely to hit its bottomline during the third quarter as the company reported a drop in assets, said analysts tracking the company. The NBFC is scheduled to post its earnings report on Wednesday.

Brokerages say its net interest income is likely to be flat to negative and profit may drop by a quarter, compared to the same quarter last year.

“Bajaj Finance’s AUM has fallen 1% YoY, and grew at 4.8% sequentially in an otherwise best quarter as the company remained risk-averse. Customer franchise has come in at 46.3 million in Q3 versus 44.1 million in Q2. The company sits on an adequate liquidity buffer of Rs 14,600 crore,” said analysts at Emkay Global.

They see NII for the company at Rs 4,557.6 crore, flat YoY and net profits at Rs 1,205 crore, down 25.35 per cent YoY.

Analysts believe the management commentary on demand recovery will be crucial.

Bajaj Finance in its business update earlier in the month said new loans booked during Q3 were 6 MM as compared to 7.7 MM in Q3FY20. Assets under management (AUM) stood at approximately Rs 143,700 crore as compared to Rs 145,092 crore.

Axis Securities in a note said the margins will be to be under pressure this quarter while accelerated provisioning is likely to continue, as companies have been ordered no to calculate bad loans as of now.

The broker expects NII at Rs 3,290 cr, down 9 per cent YoY and profit at Rs 1,185 crore, down 26.6 per cent .

Yes Securities believes consumer finance and mortgages would have driven the growth. “NIM could increase with funding cost benefits manifesting. Credit cost will remain elevated,” it said.

Ahead of the earnings, shares of Bajaj Finance surged 5.25 per cent to Rs 4,960.85 on BSE.