Bajaj Finance Q4 preview: PAT may rise 50% YoY; NIM likely to moderate

Bajaj Finance is slated to declare its March quarter earnings on Thursday wherein the analysts expect up to 50 per cent jump in net profit on year-on-year (y-o-y) basis, mainly due to robust growth in asset quality. 

ICICI Securities, for instance, estimates the consolidated net profit or profit after tax (PAT) for Q4FY19 at Rs 1,143 crore. This would be a 53 per cent y-o-y jump from a profit of Rs 747.5 crore logged in the corresponding quarter of previous fiscal. It had reported a profit of Rs 1,060 crore in the quarter ended December, 2018.

“Q4 is not expected to be as strong as the seasonally strong Q3 but it would still be decent,” analysts at ICICI Securities wrote in a result preview note.

Analysts at Motilal Oswal Financial Services (MOFSL) also expect strong growth in PAT and peg it around Rs 1,062 crore for the recently concluded quarter.

Brokerage firm Sharekhan, too, projects over 50 per cent rise in net profit, aided by a 44 per cent rise in net interest income (NII).

Analysts also expect over 30 per cent rise in assets under management (AUM) for Q4 and peg it around Rs 1,16,500 crore on the back of growth in rural, housing and consumer segment.

While MOFSL expects provisions to touch Rs 490 crore in 4QFY19, as against Rs 450 crore in 3QFY19 and Rs 230 crore in 4QFY18, ICICI Securities expects the net interest margin (NIMs) to moderate around 11.5 per cent from 11.8 per cent in Q3FY19.

Key monitorables

In the wake of a weakening consumer demand, analysts would be focusing on the management commentary to understand the disbursement trends in the industry.

Among other things, asset quality trends, incremental cost of borrowings, borrowing mix and traction in cross-sell franchise will be closely watched.

Despite a slump in non-banking financial companies (NBFCs) sector, analysts remain positive on Bajaj Finance, thanks to strong parentage and robust business model. 

At the bourses, Bajaj Finance has outperformed the benchmark S&P BSE Sensex over the last one year as the shares have jumped 58 per cent between May 2018 and May 2019 as against around 4 per cent rise in the 30-share index.

Bajaj Finserv Q4 result

The parent company, Bajaj Finserv, will also declare its Q4 results today and analysts expect a 33 per cent growth in revenue and 39 per cent growth in AUM y-o-y.

“Health and crop segment may lead to healthy growth in general insurance premium at 20 per cent y-o-y,” ICICI Securities said.