Bajaj Finance fell nearly 3% as Q1 result misses estimates; brokerages reduced target sharply

Bajaj Finance share price: Bajaj Finance shares fell over 2.5 per cent to day's low price of Rs 6,560 after the company's Q1 missed estimates. The NBFC major reported 14 per cent on-year growth in consolidated net profit of Rs 3,912 crore in the reporting quarter. In the previous day's session just ahead of the announcement of the results, the stock ended over 2 per cent lower at Rs 6,732.2 per share on the BSE.

While its assets under management as of June 30, 2024 are reported at Rs 354,192 crores. Zee Business research pegged the net profit to log 16.4 per cent on-year growth in net profit to Rs 4,000 crore. In the corresponding period last year, the NBFC company reported PAT at Rs 3,436.9 crore.

Net interest income or NII which is the difference between the interest earned and interest paid increased by 25 per cent in Q1 FY25 to around Rs 8,365 crore from Rs 6,717 crore in Q1 FY24. Net total income at the company also increased by 24 per cent in Q1FY25 to Rs 10,418 crore from Rs 8,397 crore in Q1FY24.

The desk expected the NII to soar by 26.5 per cent on year to Rs 8,500 crore. 

Brokerages' view on Bajaj Finance stock after Q1FY25 

After Q1 most global brokerages have retained their previous rating on the stock but with a reduced target price. Global brokerage Jefferies has reduced the target sharply to Rs 7,780 from the earlier Rs 9,260, while continuing with the previous buy call. The brokerage mentioned that the sharp rise in credit costs to 2.3 per cent of the average AUM was the key drag. Also, the weaker asset quality weighed on the company's financials. The brokerage further noted that a fall in NIMs may lead to slower growth in the future course.  Jefferies slashed earnings by 3-5 per cent & believes improved core earnings are key to premium valuations (24x FY25 PE).

Anil Singhvi-Zee Business Managing Editor advised to 'Sell' Bajaj Finance as the company's results came in weak on all parameters. The expert advised the stock to sell for target of Rs 6,610, 6,565, 6,435, keeping a stop loss of Rs 6,780