Bajaj Finance Q3 Results Review - On Track For Better Earnings Momentum: Motilal Oswal

Motilal Oswal Report

Bajaj Finance Ltd.’s Q3 FY23 profit after tax grew 40% YoY to ~Rs 29.7 billion (inline). This healthy performance was driven by strong velocity in customer additions/ new loan acquisitions,the ability to maintain stable margins, and a slight moderation in opex ratios, aided by operating leverage.

In nine months-FY23, profit after tax grew ~82% YoY to ~Rs 83.5 billion (Rs 46 billion in 9MFY22).

Net interest income grew 25% YoY to Rs 59.2 billion. Other operating income grew 19% YoY, driven by a healthy improvement in fee income.

Adjusted net total income grew 28% YoY (after adjusting NII of ~Rs 2 billion earned on IPO financing in Q3 FY22).

Q3 FY23 net interest margin (calc.) was stable QoQ at ~13.2%. We expect NIM to compress by ~35bp in FY24, driven by Bajaj Finance’s higher cost of borrowing and pressure on yields in a highly competitive landscape.

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