Bajaj Finance Strong Q4 Performance
Bajaj Finance witnessed a significant drop of over 8 percent in its share price during intra-day trading on Friday, April 26, immediately following the release of its Q4FY24 results. Despite the company reporting double-digit year-on-year growth in profit after tax (PAT) and net interest income (NII), concerns regarding the contraction of net interest margin (NIM) seem to have rattled investors.
Market Reaction
Bajaj Finance’s shares opened at ₹7,008.60 on April 26, marking a decline of 8.3 percent from the previous close. Intra-day trading saw the share price plummeting to ₹6,691.40 on the Bombay Stock Exchange (BSE). As of 2 PM, the shares were trading at ₹6,707 apiece, reflecting an 8.05 percent decrease.
Reasons Behind the Share Price Decline
Despite reporting robust financial performance for Q4FY24, Bajaj Finance’s net interest margin contraction has raised concerns among investors. Here’s a closer look at the key highlights of the company’s Q4 results.Bajaj Finance reported a 21 percent year-on-year increase in consolidated net profit, reaching ₹3,825 crore for Q4FY24. Similarly, the net interest income surged by 28 percent year-on-year to ₹8,013 crore. However, despite the growth in profit and net interest income, the net interest margin contracted by 21 basis points in Q4 compared to the previous quarter. The company’s gross non-performing assets (GNPA) and net non-performing assets (NNPA) stood at 0.85 percent and 0.37 percent, respectively, as of March 31, 2024, compared to 0.94 percent and 0.34 percent in the previous year.
Brokerage Perspectives
Various brokerage firms have expressed their views on Bajaj Finance’s performance. Downgraded the stock to ‘neutral’ post-Q4 results, citing limited upside catalysts despite healthy PAT growth. The firm also highlighted the company’s shift towards newer product segments, potentially exposing it to cyclical risks. Maintained an ‘add’ rating on the stock, emphasizing that the company’s Q4FY24 earnings were in line with expectations. Despite near-term challenges such as NIM compression and increased credit costs, the overall performance remains healthy.
While Bajaj Finance has demonstrated strong financial performance, concerns regarding NIM contraction and potential vulnerabilities in its growth strategy have led to a significant decline in its share price. Investors are advised to carefully assess these factors before making any investment decisions.
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