Bajaj Finance shares jump 2% on Q1 earnings. How to trade it now?

Bajaj Finance on Wednesday reported a 32.4% year-on-year (YoY) rise in consolidated net profit for the quarter ended June to Rs 3,437 crore, beating an ET Now poll estimate of Rs 3,301 crore. Total revenue from operations grew nearly 35% on year to Rs 12,498 crore. Net interest income (NII) for the quarter increased by 26% on year to Rs 8,398 crore. The number of new loans booked during the quarter grew by a sharp 34% on year to 9.94 million, and were the highest ever in a quarter.

Here’s what brokerages said on the stock:

Kotak: Reduce | Target Rs 6,800
Kotak retained a ‘Reduce’ stance on the counter and estimates the fair value at Rs 6,800. Bajaj Finance reported a strong quarter, buoyed by AUM growth, with sales finance (consumer durable loans), two-wheeler and commercial loans being the largest drivers. As such, momentum may remain strong at 27% YoY for the rest of the year, but moderate from the highs of Q1.

Lower sales finance and a rise in funding costs will likely increase sequential pressure on margins, it said, maintaining that the asset quality and expense management remains on track.

Motilal Oswal: Buy | Target: Rs 8,800
Motilal Oswal dubbed the June quarter “healthy” despite credit cost remaining at elevated levels. The brokerage firm maintained a ‘Buy’ on the stock with a target price of Rs 8,800 premised on 6.5x FY25E BVPS.

Customer acquisitions and new loan trajectory have been strong. The momentum will only get stronger ahead, with the digital ecosystem – app, web platform and full-stack payment offerings, in place, Motilal said in a note. The company should be able to offset the NIM compression in FY24 with lower operating costs ratios and credit costs.”We cut our FY25E EPS by 2% to factor in higher credit costs,” it said further.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)