Bajaj Finance Shares Drop Amid Growth Concerns

Investors witnessed a sharp decline in Bajaj Finance Ltd’s stock on Friday as concerns over the company’s profit growth surfaced. The non-banking financial giant forecasted a more moderate growth trajectory for the fiscal year starting April 1, 2024, compared to the previous year. Shares plummeted by 7.78% to touch a day low of Rs 6,728, reflecting a significant dip from its previous close of Rs 7,293.90.

Bajaj Finance Shares Price Fall Today

The company’s announcement about expecting assets under management to grow between 26% and 28% for the fiscal year ahead, compared to 34% growth in the previous year, contributed to the downward spiral. Additionally, Bajaj Finance stated that its net interest margin would face a decrease of 30-40 basis points over the next two quarters, further unsettling investors.

Brokerage Emkay acknowledged Bajaj Finance’s strong performance in Q4 FY24 but highlighted the impact of Reserve Bank of India’s embargo on EMI and e-com cards, which affected profit before tax by approximately 4%. Despite these challenges, Emkay expressed confidence in the company’s long-term strategy, tweaking its estimates marginally and maintaining a ‘Buy’ rating with an unchanged target price of Rs 9,000 per share.

bajaj finance share price
Bajaj Finance Share Price

Analyzing the financial metrics, Bajaj Finance reported a Return on Equity (ROE) of 23.46% in the previous fiscal year and a Return on Investment (ROI) of 6.01%. However, analysts’ consensus estimates project a slight decline in ROE for the current and upcoming fiscal years. Over the past three years, the company has demonstrated robust EPS and revenue growth. Notably, its revenue for the last twelve months stood at 513967.50 crore, marking a 24.15% increase from the previous fiscal year.

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Despite Bajaj Finance’s solid financial performance, the stock witnessed a decline of over 7% on the day of releasing its Q4 results. The company reported a 21% year-on-year increase in consolidated net profit for Q4FY24, along with improvements in asset quality.

Religare Broking highlighted Bajaj Finance’s robust growth in Assets under Management (AuM) driven by the secured lending segment. However, concerns lingered over declining margins. The management remains optimistic about sustaining credit quality and anticipates positive developments regarding RBI’s restrictions on cards.

In conclusion, while Bajaj Finance’s shares faced a setback amid growth concerns and market volatility, the company’s strong fundamentals and optimistic outlook suggest potential for recovery and long-term growth.

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