NBFC major is expected to report a healthy profit growth of over 30% on improvement in net interest income (NII) in its December quarter earnings to be released on Friday. Its net interest margin (NIM) may, however, compress due to rising funding costs.
“We expect NIM to compress 11 bps QoQ at 10.4% (down 48 bps YoY), reflecting the rise in funding cost and higher share of mortgage costs. We expect cost-to-average AUM ratio to remain high at 4.8% (4.8% in 2QFY23) due to investments in the digital channel. We pen down credit costs of 1.5% for 3QFY23,” said Kotak Institutional Equities.
The NBFC’s NII is seen growing 23.3% YoY to Rs 5,831 crore.
Domestic brokerage firm Prabhudas Lilladher expects Bajaj Finance to report strong PPOP (pre-provisioning operating profit) growth on the back of strong topline and better operating efficiency.
Brokerages estimate that its assets under management (AUM) may grow 30% YoY.
Operational parameters and AUM growth of 27% YoY are healthy. However, commentary on growth going forward will be keenly watched, said Axis Securities.
Key monitorables would be the management commentary on growth outlook and margin outlook.What should investors do?
The Nifty stock, which has fallen over 10% in the last one month, has just earned an upgrade from global brokerage firm Jefferies ahead of the release of its quarterly earnings report.
“With ramp-up of BHFL (housing finance sub) and potential listing over 3yrs, we move to SOTP-based approach valuing BAF, BHFL and
separately based on peer-group multiples for BHFL. This leads to revision in target price to Rs 7,280 (from Rs8,160),” it said. had also recently added the stock in its model portfolio after the recent underperformance.
“Customer acquisitions and new loans trajectory have been strong and the momentum will only get stronger with the digital ecosystem — app, web platform and the full-stack payment offerings,” it said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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