Bajaj Finance Q2 Results LIVE Updates: Net profit may grow 34%; NII seen up 29% YoY; margins likely to compress

Bajaj Finance’s consolidated net liquidity surplus stood at approximately ₹11,400 crore as of September 30, 2023. The company’s liquidity position remains strong. Customer franchise as of September 30, 2023, stood at 7.66 crore as compared to 6.29 crore YoY. In Q2 FY24, the customer franchise increased by 35.8 lakh, Bajaj Finance said in its Q2 business update.

Kotak Institutional Equities estimates Bajaj Finance to report a net profit of ₹3,588.3 crore in the second quarter of FY24, registering a growth of 29% year-on-year (YoY). The brokerage expects the company to deliver a net interest income (NII) of ₹7,136.5 crore, with a growth of 28.9 YoY. However, net interest margin (NIM) is expected to fall by 30 bps to 10.2% during the quarter,

Pre-provision profit may rise 29.9% YoY to ₹5,829.5 crore.

Reliance Industries Ltd-backed Jio Financial Services, termed to be a rival of Bajaj Finance, on Monday reported a net profit of ₹668.2 crore, doubling from the previous quarter on the back of higher income from operations.

The company’s total revenues stood at ₹608 crore in the September quarter, up 47% from the sequential quarter. While interest income in Q2 was lower than Q1, a dividend income of ₹217 crore in the September quarter propped up total revenues.

The company’s total expenses rose 33% quarter-on-quarter to ₹71 crore, primarily owing to higher employee expenses. Read full story here

Bajaj Finance share price traded over half a percent higher on Tuesday afternoon ahead of the release of September quarter earnings. The stock was trading 0.50% higher at ₹8,072.65 per share on the BSE.

According to JM Financial, Bajaj Finance is expected to post a net profit of ₹3,725.2 crore in the second quarter of FY24, registering a growth of 34% year-on-year (YoY) and 8.5% quarter-on-quarter (QoQ).

The company’s net interest income (NII) is expected to rise 29.4% YoY to ₹7,167.5 crore. NII growth is likely to be 6.7% sequentially. Pre-provisions operating profit is expected to be at ₹6,052.5 crore, up 34.9% YoY and 9.2% QoQ.

Total Asset Under Management (AUM) of Bajaj Finance in Q2FY24 is likely to rise 32.9% YoY to ₹290,200 crore.

Bajaj Finance’s net profit in Q2FY24 is expected to rise 31% year-on-year (YoY) to ₹3,650 crore, while its net interest income (NII) during the quarter is expected to grow 30% YoY to ₹7,200 crore, as per estimates by Motilal Oswal Financial Services.

The company is projected to deliver net income growth of 26% YoY to ₹8,850 crore, as per the brokerage.

Bajaj Finance reported AUM growth of 33% YoY and 7% QoQ. Opex is likely to moderate with CIR at 34%. Margins and spreads are likely to decline 30 bps and 40 bps QoQ. Credit costs are expected to decline around 5 bps QoQ in Q2FY24, according to brokerage firm Motilal Oswal Financial Services.

Approximately thirty-one companies will release their September quarter results today. Investors are focused on giants like Bajaj Finance, Tata Elxsi, and L&T Technology Services among the 31.

The companies to announce Q2 results today include Artemis Electricals And Projects Ltd, Atharv Enterprises Ltd, Bajaj Finance Limited, Benares Hotels Ltd, Can Fin Homes Ltd, Cie Automotive India Ltd, Cosyn Ltd, Duncan Engineering Ltd,Eimco Elecon (India) Ltd, Happiest Minds Technologies Ltd, Hathway Bhawani Cabletel & Datacom Ltd, Himadri Speciality Chemical Ltd, Huhtamaki India Ltd, ICICI Prudential Life Insurance Company Ltd, IIFL Securities Ltd, etc. Read full report here

In Q2FY24, NBFCs are expected to report 42% YoY earnings growth driven by 25% YoY NII growth and 29% YoY PPOP growth. While a sequential NIM compression is a reality for most NBFCs, the impact is likely to be more pronounced among vehicle financiers followed by diversified NBFCs. While affordable HFCs may see some compression, brokerage firm JM Financial expects relatively modest impact on NBFC-MFIs (given benefits of lending rate increases). 

Asset quality is likely to reflect continued steady trends led by continued lower credit costs (impact of floods to be seen for NBFC-MFIs). Overall, as a pack, strong earnings performance is seen in diversified NBFCs, NBFC-MFIs, affordable HFCs followed by vehicle financiers.

Bajaj Finance shares have risen 8% in the last one month and 7% in the last three months, while the stock is up more than 23% year-to-date (YTD). In the last three years, Bajaj Finance share price has surged over 148%.

Bajaj Finance reported 7.4% QoQ loan growth (6-9% QoQ in the last four quarters), driving 33% YoY growth in AUM. NIM will likely compress 20 bps QoQ and 30 bps YoY to 10.2% in 2QFY24, driven by an increase in cost of borrowings; seasonal trends suggest marginally lower yields in 2Q, Kotak Institutional Equities said. 

It expects cost-to-average AUM ratio to moderate to 4.3% (4.4% in 1QFY24 and 4.8% in 2QFY23). We pen down credit costs of 1.4% for 2QFY24E, the brokerage house said.

Bajaj Finance said its deposits book stood at approximately ₹54,800 crore as of September 30 as compared to ₹39,422 crore as of September 30, 2022, registering a year-on-year (YoY) growth of 39%.

In its quarterly business update, Bajaj Finance said its assets under management (AUM) grew by 33% to approximately ₹2,90,200 crore as of September 30, 2023, as compared to ₹2,18,366 crore as of September 30, 2022. AUM in Q2FY24 grew by approximately ₹20,100 crore.

New loans booked during Q2FY24 grew by 26% to 85.3 lakh as compared to 67.6 lakh in Q2FY23.

Bajaj Finance share price opened higher on Tuesday ahead of the release of September quarter financial results later today. Bajaj Finance shares opened 0.77% higher at ₹8,094.95 apiece as compared to previous close of ₹8,032.75 apiece on the BSE. The stock hit a 52-week high of ₹8,190 per share on October 06, 2023, and a 52-week low of ₹5,487.25 on March 20, 2023.

As per analysts, Bajaj Finance’s net profit in the quarter ended September 2023 is expected to jump around 34% year-on-year (YoY) to ₹3,725 crore. On a sequential basis, net profit is likely to see a growth of 8.5%. Credit costs during the quarter are likely to be higher by 165 bps YoY. The company’s management has guided credit costs at 155-165 bps for the rest of the financial year. Read full report here

Bajaj Finance on Tuesday, October 17 announced that it had acquired up to 26 per cent equity stake in Pennant Technologies Private Limited for about ₹267.50 crore. Pennant is a technology product company, engaged in providing business-driven technology services and software products for the banking and financial services industry. It had a turnover of about ₹74.28 crore in FY23. Read full report here

Bajaj Finance’s net interest income (NII) in Q2FY24 is expected to rise more than 29% to ₹7,165 crore from ₹5,537 crore a year earlier. Analysts expect the consumer financier’s net interest margin (NIM) to compress by 30 basis points (bps) YoY to 10.2% driven by an increase in cost of borrowings.

Credit costs during the quarter are likely to be higher by 165 bps YoY. The company’s management has guided credit costs at 155-165 bps for the rest of the financial year.

Bajaj Finance is expected to report a sharp growth in Q2FY24 net profit with stable asset quality and strong loan growth. As per analysts, Bajaj Finance’s net profit in the quarter ended September 2023 is expected to jump around 34% year-on-year (YoY) to ₹3,725 crore. On a sequential basis, net profit is likely to see a growth of 8.5%.

Ahead of the release of Q2 results, Bajaj Finance announced that it will acquire 26% stake in technology product company Pennant Tech for ₹267.50 crore in an all-cash deal. The objective of strategic investment is to strengthen the company’s technology roadmap, Bajaj Finance said in a regulatory filing.

Bajaj Finance, the non-banking finance company, is set to announce its financial results for second quarter of FY24 today, 17 October, 2023.