Analysts turn cautious on Bajaj Finance as Q1 brings asset quality concerns

Mumbai: Brokerages have sounded a caution on Bajaj Finance’s asset quality after the company’s June quarter results.

The company reported a 3 per cent year-on-year decline in net profit to Rs 843 crore for the quarter ended June. Shares of Bajaj Finance ended down 1.2 per cent at Rs 5,937.90 on Tuesday.

Bajaj Finance’s gross non-performing loans ratio stood at 2.96 per cent as against 1.79 per cent in the previous quarter. The net NPA ratio was at 1.46 per cent as against 0.75 per cent in the previous quarter.


Nomura has downgraded the stock to ‘hold’ and reduced target price to Rs 6,390 from Rs 6,500. Lowering earnings estimates by around 8 per cent for the ongoing and next financial year, Nomura said near-term upside in the stock should be limited.

“Although we are optimistic about BAF’s business transformation journey, we are keeping an eye on its progress and prefer to remain cautious toward headwinds on the asset quality front,” said Emkay Global, retaining a ‘hold’ rating and revising target price to Rs 5,900 from Rs 5,400 on rolling forward of estimates.

HDFC Securities cut FY22 and FY23 earnings estimates by 9 per cent each, saying that the quarterly result reflected the impact of the second wave of Covid-19 on asset quality and business momentum. The brokerage has retained a ‘reduce’ rating on Bajaj Finance. Elara Securities has retained ‘sell’ with a target price of Rs 4,630.

Bernstein has retained the ‘outperform’ rating and Motilal Oswal has maintained a ‘buy’.