Bajaj Finance, a prominent entity in the non-banking finance sector, faced a significant decline in its stock price following the release of its Q4 results. The stock plummeted by over 7% on 26 April, 2024, the day of the earnings announcement.
Share Price
The share price of Bajaj Finance opened at Rs 7008.60, a significant drop from its previous close of Rs 7293.90. Subsequently, it experienced a sharp decline of 7.2% to Rs 6772.15 on the Bombay Stock Exchange (BSE).
Bajaj’s Financial Highlights
Bajaj Finance had reported a consolidated net profit of Rs 3825 crore for Q4FY24 – a 21% year-on-year increase. Additionally, the net interest income (NII) saw a significant increase of 28% year-on-year to Rs 8013 crore. However, the net interest margin contracted by 21 basis points compared to the previous quarter.
In terms of asset quality, Bajaj Finance showed improvement, with gross non-performing assets (NPAs) and net NPAs standing at 0.85% and 0.37% respectively, as of 31 March.
However, Bajaj Finance’s share price performance over the past year lagged behind Sensex, gaining only about 20% compared to Sensex’s 24% increase during the same period.
Analysts’ Outlook
Religare Broking expressed a positive outlook on Bajaj Finance shares, recommending a Buy rating with a target price of Rs 8861. They valued the company at 5.4 times its Adjusted Book Value for FY26E. Religare Broking highlighted strong growth in Assets under Management (AuM), primarily due to the secured lending segment. However, they did note a continuous decline in margins as well.
Contrary to Religare Broking, Motilal Oswal Financial Services downgraded Bajaj Finance’s stock to ‘neutral’ after Q4 results. They set a target price of ₹7800 due to limited upside catalysts for the company despite healthy projected Profit After Tax Compound Annual Growth Rate (PAT CAGR) and Return on Assets (RoA) and Return on Equity (RoE) in FY26E. Motilal Oswal expressed concerns regarding management’s guidance for FY25, which fell below long-term targets in several metrics.
Analysts anticipate near-term pressure on the stock due to margin contraction and regulatory uncertainties.
