Stock of Bajaj Finance Declines 2.55% Following Q1 Earnings Release

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After the company’s Q1 results report was released on Wednesday, it saw a 2.55% decline in share price to Rs 6560, missing analyst estimates. Bajaj Finance’s market value decreased to Rs 4.08 lakh crore. On the BSE, 0.40 lakh shares were traded for a total value of Rs 26.23 crore.

Summary of Q1 Earnings

Compared to Rs 3,437 crore in the June 2023 quarter, Bajaj Finance recorded a 14% increase in net profit, or Rs 3,912 crore, in the June 2024 quarter. Revenue increased to Rs 16,098 crore in Q1 of this year from Rs 12,497 crore in the same time the previous year.

Performance of Stocks and Market Indicators

The market capitalization of the shares dropped to Rs 4.08 lakh crore on Wednesday along with its dip to Rs 6560. With a relative strength index (RSI) of 35.4, Bajaj Finance is neither overbought nor oversold. The stock has a one-year beta of 0.9, which indicates minimal volatility during that time.

Price targets and brokerage ratings

The Neutral Position of Motilal Oswal

Following Q1 earnings, Motilal Oswal kept a neutral position and set a price objective of Rs 7,500, an 11% rise from the previous closing. The brokerage adjusted for increased steady-state normalized credit charges by 3% in its FY26 PAT projection. They anticipate few upside catalysts, despite projecting a 27% CAGR in AUM and a 24% PAT over FY24–FY26 and anticipating Bajaj Finance to deliver RoA/RoE of 4.2%/22% in FY26.

Jefferies’ Updated Price Objective

worldwide brokerage While keeping its ‘Buy’ rating, Jefferies lowered its price objective from Rs 9,260 to Rs 7,780. The profit fell short of street estimates, mostly because credit charges increased more sharply and now account for 2.3% of average AUM after reserves were used.

Citi’s Modifications

Citi maintained its ‘Buy’ rating on Bajaj Finance while lowering its price objective to Rs 8,275. Core earnings fell short of forecasts, with NIMs declining by 23 basis points compared to the first-half guidance of 30–40 basis points. Furthermore, the credit cost was higher at 2% than the recommendation of 1.75–1.85%.

Financial Performance Information: Asset Growth and Expense

The total amount spent during the most recent quarter increased to Rs 10,839.48 crore from Rs 7,951 crore during the same period the previous year. Compared to Rs 2.70 lakh crore in Q1 FY24, assets under management (AUM) increased by 31% to Rs 3.54 lakh crore in Q1.

Sanctions on Lending and Customer Increase

From 0.94 crore in the June 2023 quarter to 1.09 crore, the amount of new loans booked grew by 10%. On May 2, 2024, the RBI relaxed limitations on these operations, allowing the corporation to resume the sanctioning and disbursing of loans under the eCOM and Instant EMI Card brands. As of June 30, 2024, there were 88.11 million customers, up 21% from 72.98 million the year before. In Q1 FY25, the company’s customer base increased by 4.47 million.

The NPA Ratio and Net Interest Income

From Rs 6,717 crore in Q1 FY24 to Rs 8,365 crore in Q1 FY25, net interest income climbed by 25%. From 0.87% and 0.31% on June 30, 2023, to 0.86% and 0.38% on June 30, 2024, were the Gross Non-Performing Assets (NPAs) and Net Non-Performing Assets (NPAs), respectively. For stage 3 assets, the provisioning coverage ratio is 56%.

In summary

The stock price of Bajaj Finance dropped as a result of the company’s Q1 earnings not meeting projections. Market sentiment has been negatively impacted by rising credit costs and missing core profits projections, especially in spite of a noticeable growth in net profit and revenue. Brokerages hold differing opinions; some change price goals without changing ratings. In order to spot possible chances, investors should keep a close eye on upcoming financial reports and market conditions.

Disclaimer: This article provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.