Bajaj Finance Q1 Results Review - Healthy Quarter Despite Elevated Credit Costs: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.Bajaj Finance Ltd.’s Q1 FY24 reported profit after tax jumped 32% YoY to ~Rs 34.4 billion (inline). The good operational performance was driven by: healthy run-rate in customer additions/new loans disbursed,further asset quality improvement, and YoY moderation in cost income ratios during the quarter.Net interest income grew 27% YoY to ~Rs 67.2 billion. Other operating income rose 23% YoY and net total income jumped 27% YoY to ~Rs 84 billion. NIM (calculated) was stable QoQ at ~13% in Q1 FY24 even as reported NII declined ~10 basis points QoQ. We model a NIM compression of ~25 bp in FY24E due to the expected rise in cost of borrowings and difficulty in passing on interest rate hikes to customers.We estimate an assets under management/profit after tax compound annual growth rate of ~29%/26% over FY23-FY25 and expect Bajaj Finance to deliver an return on asset/return on equity of 4.6%/25% in FY25.Key monitorables in FY24:evolution of its payments landscape and adoption of its payment offerings, anddegree to which the NIM compression can be offset with operating leverage that can result in a decline in cost ratios.Reiterate 'Buy' with a target price of Rs 8,800 (premised on 6.5 times FY25E book value per share)..Click on the attachment to read the full report:.Bajaj Finance Q1 Results: Profit Rises 25.5% On Higher Core Income.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Bajaj Finance Q1 Results Review - Healthy Quarter Despite Elevated Credit Costs: Motilal Oswal

Net interest margin compression likely to continue for two more quarters.

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