After releasing poor third quarter (Q3) results for the month of December, shares of Bajaj Finance continued to decline for the second straight session. For the first time since July 2022, the stock plummeted below the 6,000 level on Friday after dropping more than 2% to 5,974 a share on the BSE in early deals. The stock has fallen more than 9% in the past two sessions, extending its downward trend.
After reporting modest increase in new loans and assets under management (AUM) for the third quarter of the current fiscal, Bajaj Finance shares fell as much as 8% on Thursday.
“Bajaj Finance reported 6% sequential and 27% yoy growth in AUM. As the third quarter of the year is typically a good quarter driven by holiday demand, this result fell somewhat short of street expectations. But one observed the greatest number of new customer additions and loan bookings. The rapid rise of deposits has improved the borrowing profile by making it more granular and retail. The level of capital adequacy and liquidity situation are both still adequate, “a letter from the brokerage Antique Stock Broking.
Despite being the highest for the quarter at 3.1 million, new client acquisition was slower than anticipated, according to analysts at Antique. They also noted that new loans booked showed that current customers’ contribution is still considerable.
“Bajaj Finance’s next phase of customer acquisition through the digital medium is progressing somewhat more slowly than we had anticipated. However, the business is now expanding rapidly thanks to its current clients, but we think this cannot continue indefinitely, and growth may perhaps slow down in the medium term. In light of the aforementioned worries, the stock has declined over the last three months, and until the business experiences another period of great performance, we think it is currently fairly valued,” Antique continued.
Assets under management (AUM) for the company increased from 181,250 crore in December 2021 to about 230,850 crore in December 2022, a 27% increase year over year.
“The pre-quarter statement for Q3FY23 from Bajaj Finance reveals some deceleration in AUM growth. The beneficial seasonality is the reason for the QoQ growth of 15% in new loan booking, which was also slower at 5% YoY growth (festive-period). We’ll keep an eye on the 3Q results to see if this is a result of the retail/SME loans or the shorter-term securities lending business. Softer growth up until then may have a short-term negative impact on stock “based on international brokerage Jefferies.
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