Bajaj Finance Q2 Results Review- Inline; Reported Net Interest Margin Contracts 15 Basis Points: 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 Q2 FY24 reported profit after tax grew 28% YoY to ~Rs 35.5 billion (inline).Net interest income rose 30% YoY to ~Rs 72 billion. Other operating income grew 13% YoY, and net total income jumped 26% YoY to ~Rs 88.4 billion in Q2 FY24. Bajaj Finance’s Q2 FY24 net interest margin (calc.) contracted ~35 basis points QoQ to ~12.6% even as the reported NIM declined ~15 bp QoQ. We model NIM compression of ~20 bp in FY24 due to the expected rise in cost of borrowings and challenges in passing on any further interest rate hikes. We have incorporated the announced equity capital raise of ~Rs 100 billion in our estimates and model an assets under management/profit after tax compound annual growth rate of ~29%/28% over FY23- FY26. We expect Bajaj Finance to deliver an return on asset/return on equity of 4.8%/23% in FY26. Key monitorables for FY24 are:the evolution of its payments landscape and adoption of its payment offerings, andthe degree to which the NIM compression can be offset with operating leverage, resulting in a contraction in cost ratios. Reiterate 'Buy' with a target price of Rs 9,600 (premised on 5.7 times September-25E book value per share)..Click on the attachment to read the full report:.Bajaj Finance Q2 Results: Profit Rises 26% On Higher Total 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 Q2 Results Review- Inline; Reported Net Interest Margin Contracts 15 Basis Points: Motilal Oswal

NIM compression will continue in H2 FY24 as well.

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