Bajaj Finance Q1 FY22 preview: Double-digit growth in profit expected, but asset quality may remain under pressure


Bajaj Finance Q1 FY22 preview: Double-digit growth in profit expected, but asset quality may remain under pressure

Bajaj Finance will report its numbers for the quarter ended June 2021 today, July 20

The company is expected to report double-digit growth in profit, as well as net interest income. However, asset quality pressure is likely on account of lockdowns, which will lead to elevated provisions.

Despite partial lockdowns, the company reported better growth in the June quarter with assets under management (AUM) at approximately Rs 1,59,000 crore (including IPO financing receivable of approximately Rs 2,900 crore) growing 15.2 percent compared to Rs 1,38,055 crore in June 2020 quarter. “AUM in Q1 FY22 grew by approximately Rs 7,100 crore (Rs 4,200 crore excluding IPO financing receivable),” said Bajaj Finance while announcing provisional numbers for June quarter.

Bifurcation of AUM would be key monitorable as the durable segment seems to have been affected by lockdowns, said Emkay Research which expects a 17 percent YoY growth in net interest income and 11.4 percent growth in pre-provision operating profit.

Customer franchise at 5.05 crore in June 2021 increased significantly compared to 4.3 crore in June 2020, said Bajaj Finance, adding it acquired 0.19 crore new customers in Q1 FY22 compared to 0.05 crore in Q1 FY21.

New loans booked during Q1 FY22 was 0.46 crore compared to 0.18 crore in Q1 FY21, said the company in its BSE filing on July 6.

The company’s deposit book stood at approximately Rs 28,000 crore as of June 2021 compared to Rs 20,061 crore as of June 2020. Deposit book in Q1 FY22 grew by approximately Rs 2,200 crore.

The liquidity position of Bajaj Finance remained strong at Rs 10,900 crore as of June 2021.

“We expect asset quality pressure is inevitable amid recent lockdowns. We also await commentary on the company’s digital journey, including the launch of Bajaj Pay,” said Emkay.

KR Choksey also expects credit costs to remain elevated considering the impact of Covid-19 second wave and expects the cost to income to be around 33 percent. Net interest income growth could be around 17.6 percent YoY and pre-provision operating profit 8.7 percent YoY in June quarter 2021, said the brokerage. The profit is likely to grow 33 percent in Q1, it said.

ICICI Direct also feels asset quality is expected to report some surge due to lockdowns but strong provisions, write-off would keep headline GNPA stable. Provisions may stay elevated at Rs 1,520 crore as the management raised Q1 credit cost guidance, said the brokerage which sees 21 percent growth in NII, 11 percent in pre-provision operating profit and 46 percent in profit.

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News Source:- Moneycontrol

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