Recommendation: Add
Target price: Rs 8,300
Bajaj Finance could register healthy growth for the March quarter of 2022. It is one of the main beneficiaries of the economic recovery. The company recorded robust Assets Under Management (AUM) growth of 9% on a sequential basis and 29% from the prior year quarter to Rs 1.98 trillion. After adjusting for near-term IPO financing, this metric increased 5% sequentially and 26% from the prior year quarter.
Consequently, its net interest income (NII) growth could reach 34%, amid strong traction in new loans.
Its net interest margin could improve sequentially as excess liquidity normalizes.
The momentum in revenue and operational performance could lead to a 78% increase in its profit after tax (PAT) to 23.9 billion rupees. Credit costs may also moderate due to improved collections.
Important management information to monitor:
Prospects for growth in assets under management in all segments
Asset quality trends
Progress on app-based ecosystem
|
Billion rupees |
March 2022 estimates |
QoQ change |
Annual change |
| Net interest income (NII, ex-assignment income) | 51.4 | 9% | 34% |
| Net operating income | 64.0 | 7% | 37% |
| Operating income before provisioning | 41.5 | 6% | 36% |
| Profit After Tax (PAT) | 23.9 | 13% | 78% |
Source: IIFL Research
