Bajaj Finance reports strong asset growth but loan bookings disappoint Street

Share price of Bajaj Finance opened marginally higher on October 6 and then slipped into red, despite the company reporting robust AUM (assets under management) growth of 31 percent for the September quarter. AUM grew to approximately Rs 2.18 lakh crore as compared to Rs 1.66 lakh crore as of 30 September 2021.

At 9:30 am, the stock was quoting at Rs 7,376 on the National Stock Exchange, down 1.5 percent. It is the the top index loser today. The stock has gained almost 50 percent from its June low of Rs 5,200 levels.

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In an exchange filing, the company informed that customer franchise now stands at 62.9 million as compared to 52.8 million in the year-ago period. “In Q2FY23, the customer franchise increased by 2.6 million. New loans booked during the quarter were 6.8 million as compared to 6.3 million in Q2FY22,” it added.

On a sequential basis, new loan bookings have seen a drop from 7.4 million in Q1FY23. Global brokerage firm Macquarie has an underperform call with a target of Rs 5,000 on the stock. “AUM growth is ahead of estimates but loan volumes are flat versus FY20 overall volume. Loans booked are still below estimate of 7 million.”

CLSA has a Sell rating with a target of Rs 5,600 per share. “Number of loans disbursed was up only 8 percent YoY. This divergence between volume and value growth could be due to higher ticket sizes, and mix changes,” it said.

Meanwhile, Bajaj Finance’s liquidity surplus remains strong with consolidated net liquidity surplus at Rs 9,300 crore. For the quarter ended September, capital adequacy ratio (CRAR) stood at 25.1 percent and deposit book recorded a growth of 37 percent YoY to Rs 39,400 crore.

Jefferies and BofA Securities remain bullish on the stock with Buy call and target prices of Rs 8,000 and Rs 8,345 respectively. They believe uptick in customer franchise and AUM are positive triggers for Bajaj Finance and the company is well-positioned for strong growth revival.

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