Bajaj Finance stock plunges 8%; here’s why

Shares of Bajaj Finance emerged as top laggard on the stock exchanges on Thursday, declining as much as 8% in intraday trade on the BSE after the consumer finance company reported lower-than-expected growth in assets under management (AUM) during third quarter ended December 31, 2022. The fall in share price was in sync with broader market, with the BSE Sensex and the NSE Nifty tumbling as much as 1% during the session today.

On Thursday, Bajaj Finance share price opened lower at ₹6,540, against the previous closing price of ₹6,573.60 on the BSE. Extending opening losses, the largecap stock declined as much as 8.2% to hit an intraday low of ₹6,032.25, while the market capitalisation slipped to ₹3.7 lakh crore. There was spurt in volume trade as 2.76 lakh shares changed hands over the counter at the time of reporting as compared to the two-week average volume of 0.21 lakh stocks.

Bajaj Finance’s AUM grew 27% year-on-year (YoY) and 6% quarter-on-quarter (QoQ) in Q3 FY23, as compared to 31% and 7%, respectively, in Q2 FY23. “Assets under management (AUM) grew by 27% to approximately ₹2,30,850 crore as of December 31, 2022, as compared to ₹1,81,250 crore as of December 31, 2021. AUM in Q3 FY23 grew by approximately ₹12,500 crore,” the Bajaj group company said in a BSE filing on Wednesday.

The company in its quarterly business update said that new loans booked in the October-December period were the highest ever at 7.8 million, up 5.4% from 7.4 million in the year-ago period. Deposit books stood at around ₹43,000 crore at the end of the December quarter of 2022, as compared to ₹30,481 crore in the year ago period, registering a YoY growth of 41%.

As of December 31, 2022, customer franchise stood at 66 million as compared to 55.4 million in the same period last fiscal. The company recorded highest ever quarterly increase in its customer franchise of 3.1 million in Q3 FY23, it said.

The company further stated that its consolidated net liquidity surplus stood at approximately ₹12,750 crore as of December 31, 2022, and its liquidity position remained strong. “The company continues to remain well capitalised with a capital adequacy ratio (CRAR) of approximately 25.1% as of December 31, 2022,” it added.

The board of Bajaj Finance is scheduled to meet on January 27 to consider and approve the financial results for the December quarter of the current fiscal. In the July-September quarter of 2022 (Q2 FY23), the company logged its highest-ever quarterly consolidated net profit on the back of healthy growth in net interest income (NII) and lower loan loss provisions. The net profit surged 88% YoY to ₹2,781 crore, while NII grew 31% YoY to ₹7,001 crore in Q2FY23. The AUM of the lender climbed 31% YoY to ₹2.18 lakh crore at the end of the September quarter.

The company’s loan book grew 7% to 6.76 million as against 6.33 million loans booked in the year-ago period. It added 2.61 million new customers in Q2 FY23, taking the customer franchise to 62.91 million. The deposit book stood at ₹39,422 crore at the end of the September quarter, with net addition of ₹5,320 crore during the quarter.

On the asset quality front, gross NPAs fell 8 basis points (bps) sequentially to 1.17% and net NPAs declined by 6 bps to 0.44%. During the quarter under review, loan loss provisions dropped 44% YoY to ₹734 crore compared to ₹1,300 crore in the year-ago period.