India’s leading non-banking financial company Bajaj Finance is expected to report robust growth in key financial metrics for the third quarter of current fiscal backed by strong rise in assets under management. As per estimates by leading brokerage firms tracking the company, Bajaj Finance’s consolidated net profit for October-December period is projected to increase by over 25% on yearly basis to around Rs 3,716 crore.
The surge in net profit will be driven by healthy growth in net interest income as well as stable asset quality for the lender during the quarter under review. Brokerage reports have estimated around 26% yearly jump in Bajaj Finance‘s net interest income to Rs 9,344 crore for Q3 FY23. This rise in top line is attributed to strong growth in the company’s assets under management which crossed the Rs 3 lakh crore milestone for the first time during the December quarter, marking a 35% increase compared to same period last year.
Bajaj Finance’s deposit book also registered robust growth of 35% to reach Rs 58,000 crore as on December 2022. The company added over 98 lakh new loans during the quarter, reflecting 26% yearly growth in loan disbursement. Experts tracking the NBFC sector expect Bajaj Finance’s net interest margins and spreads to moderate slightly due to rising cost of funds across the industry. However, the impact on margins is projected to be marginal at around 10-25 basis points sequentially.
Credit costs for the lender are estimated to increase marginally to around 1.7% of assets compared to the previous quarter. Overall, strong growth in loan book driven by festive demand as well as stable asset quality is expected to help Bajaj Finance report healthy financial performance for the December 2022 quarter.
Investor focus will be on management commentary regarding impact of RBI’s new digital lending guidelines as well as outlook on unsecured lending segment. Bajaj Finance’s Q3 earnings scheduled on January 29 will provide further insights into business momentum and guidance for the rest of the fiscal year.
In summary, this earnings growth will be driven by a rise in net interest income and stable asset quality. Net interest income is estimated to jump 26% to Rs. 9,344 crore owing to strong AUM growth. Bajaj Finance’s AUM crossed Rs. 3 lakh crore for the first time in Q3, registering a 35% YoY rise.
