Bajaj Finance Shares Plummet 5% After Q3 Results; Analysts Remain Bullish

Bajaj Finance‘s stock price witnessed a sharp decline of nearly 5% on Tuesday, following the release of their Q3FY24 financial results. The share price opened at ₹6,993 and fell to a low of ₹6,841.65, displaying investor disappointment with the numbers. Bajaj Finance had reported a consolidated revenue of ₹14,161.09 crore, indicating a YoY increase of 31.3%. Their profit after tax for the quarter also rose by 22.4% YoY, amounting to ₹3,638.95 crore.

A significant milestone was achieved in Q3FY24, with Bajaj Finance’s consolidated assets under management (AUM) surpassing ₹3,00,000 crore, amounting to ₹3,10,968 crore as of December 31, 2023. This growth in AUM was driven by a 35% increase from the previous year’s figure of ₹2,30,842 crore. The company’s net interest income also displayed substantial growth, rising by 29% to ₹7,655 crore from ₹5,922 crore YoY.

Bajaj Finance’s gross NPA and net NPA as of December 31, 2023, stood at 0.95% and 0.37% respectively, a decline from the figures reported in the previous year. The company holds a provisioning coverage ratio of 62% on stage 3 assets. Despite the positive figures, the stock experienced a significant decline in the market.

Several brokerage firms, however, remain optimistic about Bajaj Finance’s growth prospects and have recommended a ‘buy’ on the stock following the Q3 results. Motilal Oswal Financial Services has set a target price of ₹8,500, showcasing an 18% potential upside. Their analysis indicates that Bajaj Finance’s customer acquisitions and loan trajectory have been strong, with expectations of further growth in the digital ecosystem.

Nirmal Bang also holds a ‘buy’ rating on the stock with a target price of ₹9,100, indicating a potential upside of 27%. They anticipate stable NIM despite rising cost of funds. While challenges in asset quality may affect growth in certain segments, they believe the regulatory ban on digital lending products will likely be reversed soon.

JM Financial maintains a ‘buy’ call as well and has set a target price of ₹10,000. They believe that Bajaj Finance is well-positioned to capitalize on diversified consumption opportunities. The easing of regulatory restrictions is expected to act as a positive catalyst for the stock, and they emphasize the company’s strong return ratios and ability to grow across cycles.

While Bajaj Finance’s stock price faces short-term pressure, analysts continue to be bullish about its long-term prospects. Investors should consider these expert opinions while evaluating their investment decisions.