As Q4 results fell short of expectations, Bajaj Finance shares fell more than 7%; these are the best brokerage methods

The day Bajaj Finance revealed its Q4 data was Friday, April 26, and the stock saw a decrease of more than 7%. Bajaj Finance’s share price began trading at Rs 7,008.60, down from its previous close of Rs 7,293.90. It then saw a 7.2% decline to Rs 6,772.15 on the BSE.

 

Bajaj Finance reported a 21% YoY growth in consolidated net profit in Q4FY24, hitting Rs 3,825 crore, after the market close on Thursday, April 25.

Finance Bajaj in Q4 of FY24
In Q4 of FY24, net interest income increased by 28% YoY to Rs 8,013 crore from Rs 6,254 crore in Q4 of FY23. But in Q4 compared to Q3, the lender’s net interest margin shrank by 21 basis points.

Gross non-performing assets and net non-performing assets (NPA) improved from 0.94% and 0.34% as of March 31, 2023, to 0.85% and 0.37%, respectively, as of March 31, 2024, in terms of asset quality.

As of the closing on April 25, Bajaj Finance’s share price had increased by around 20% over the previous year, despite these financial results. But this was not as good as the benchmark Sensex, which had increased by almost 24% in the same time frame.

Brokers with Bajaj Financing
Bajaj Finance’s Religare Broking
Several important comments were made in a recent study on Bajaj Finance by Religare Broking. The company’s secured lending division was the main driver of the strong increase in its Assets under Management (AuM). On the other hand, the margins kept dropping.

The management is confident that credit quality would be maintained and expects the Reserve Bank of India (RBI) to lift card limitations.

Financially speaking, Religare Broking projects that over the course of FY24–26E, Net Interest Income (NII), Pre-Provision Operating Profit (PPOP), and Profit After Tax (PAT) would increase at Compound Annual Growth Rates (CAGRs) of 26%, 24%, and 25%, respectively.

Religare Broking continues to have a favorable view on Bajaj Finance and suggests buying the stock with a target price of Rs 8,861. The firm is valued at 5.4 times its Adjusted Book Value (Adj. BV) for the fiscal year 2026.

On Bajaj Finance, Motilal Oswal
Motilal Oswal Financial Services downgraded Bajaj Finance’s shares to “neutral” and set a target price of ₹7,800 after the Q4 results, citing a lack of positive catalysts for the business.

Motilal Oswal voiced concerns despite estimating a high Profit After Tax (PAT) Compound Annual Growth Rate (CAGR) of approximately 25% between FY24-FY26E and anticipating a Return on Equity (RoE) of 22% and a Return on Assets (RoA) of 4.3% in FY26E.

The brokerage observed that the management’s projections for FY25, including growth in assets under management (AUM), credit costs, return on assets (ROA), and return on equity (RoE), fell short of its long-term aims in these areas.

Additionally, Motilal Oswal outlined possible dangers linked to Bajaj Finance’s entry into more recent product categories, including automobiles, tractors, commercial vehicles (CVs), and perhaps microfinance institutions (MFI). Despite having a well-diversified product mix, Motilal Oswal warned that this diversity might expose the company’s growth to cyclicality.