Bajaj Finance Share Price Dips On Quarterly Update, But Brokerage Sees Silver Lining

Bajaj Finance’s share price was down following a business update that showed sluggish growth in the non-banking financial company’s new loan book.

What Happened: The growth of the new loan book was affected by Reserve Bank of India (RBI) restrictions on sanctioning and disbursing loans under the eCOM and Insta EMI Card schemes. New loans grew 4% to 7.87 million compared with 7.56 million a year ago.

On the positive side, the firm saw a 34% surge in assets under management (AUM) and substantial growth in its customer base.

The company reported an increase in AUM to ₹330,400 crore for the March quarter from a year ago, alongside a notable rise in its customer base to 8.36 crore from 6.9 crore in the previous year.

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Brokerage Call: Jefferies was positive on the update and maintained its “buy” recommendation on the stock with a target price of ₹9,400.

Jefferies analysts noted that Q4FY24 pre-quarter AUM slightly exceeded their estimate of 33%, with healthy customer base growth at 21%.

Nevertheless, it did note the slight miss in new loan bookings. The report highlighted that new loan bookings could have been 15% higher if not for restrictions on eCom and Insta EMI Card.

The brokerage emphasised that while the company has provided details to the RBI, the lifting of restrictions will be crucial for its performance. These restrictions were imposed in November due to non-adherence to the RBI's digital lending guidelines.

Price Action: Bajaj FInance’s share price was down 0.51% at ₹7,245.95 near the start of trade on Friday.

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