Bajaj Finance shares fall 6.5 percent after Q4 result
Published On: Wednesday, April 27, 2022 | By: Team KnowMyStock
Shares of Bajaj Finance dropped 6.63 percent to Rs 6,758 apiece on the BSE in Wednesday’s intra-day trade despite registering strong growth in net profit by 80 percent year on year (YoY) at Rs 2,420 crore for the fourth quarter due to higher net interest income and lower provisions. that ended in March 2022 (Q4FY22).as analysts remained mixed on the company’s future prospects. Bajaj Finance’s net interest income (NII) surged 30 percent y-o-y to Rs 6,068 crore in the March quarter. The company said it was its highest ever consolidated net profit. It also reported the highest ever consolidated profit after tax of Rs 7,028 crore for the fiscal year ended March 2022. The other large component of its revenues was in the form of fees and other income of Rs 1,164 crore, up 51 percent from the same period last year. While asset under management (AUM), portfolio composition, and digital transformation will remain key drivers for the stock, premium valuation, and elevated costs may cap upside.
The total AUM of the company grew 29 percent to Rs 1.97 trillion as of 31 March on a consolidated basis.The company also announced a dividend of Rs 20 per share. The record date for the payment of dividends is July 1, 2022.
“We expect BAF to deliver a healthy AUM CAGR of 25 per cent over the next two years. We expect it to contain credit costs 1.7 per cent in FY23. Even though the management has guided that it will prioritize margin over loan growth, NIM compression is likely in FY23, as levers like normalization in excess liquidity and borrowing costs have largely played out. The competitive landscape also continues to remain aggressive. We cut our FY23/FY24 PAT estimate by 4 per cent each to factor in potential NIM compression and a higher OPEX ratio of 35 per cent over the next two years. The company should deliver an RoA/RoE of 4.2-4.4 per cent/21-22 per cent over the medium term. We maintain our buy rating with a target price of Rs 8,350 per share (8x FY24E BVPS)," Motilal Oswal said.
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