Bajaj Finance Q3 Results Review - Sustainable Performance To Aid Valuation: ICICI Direct

ICICI Direct Report

Bajaj Finance Ltd.'s net interest income grew 23.8% YoY to Rs 7433 crore led by healthy momentum in assets under management growth. However, the pace of AUM growth moderated a bit compared to earlier trend. Net profit grew 40% YoY and 7% QoQ to Rs 2973 crore.

AUM growth came in at 27.4% YoY (5.7% QoQ) increasing to Rs 2,30,842 crore, primarily driven by 29% YoY, 6% QoQ growth in consumer business-to-consumer finance and surge in small and medium enterprise, securities and commercial lending.

Mortgage also grew 26% YoY growth and 3.4% QoQ to Rs 73484 crore. Bajaj Housing Finance Ltd. AUM was at Rs 63815 crore, included in mortgage book. In Q3, cost of funds was 7.14%. Cost of funds increased by 23 bps over Q2 FY23. However, the company delivered net interest margin at Q2 levels despite an increase in cost of funds.

Provisions for Q3 FY23 increased to Rs 841 crore from Rs 734 crore. Gross non-performing asset, net non-performing asset were at 1.14%, 0.41%, respectively, as of Q3 FY23 versus 1.17%, 0.44%, respectively, as of Q2 FY23.

Bajaj Finance holds a management and macroeconomic overlay of Rs 1000 crore. It has 64% coverage ratio on stage-III assets and 116 bps on stage-I and II assets.

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