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Q2 Results: Bajaj Finance Profit Beats Estimates, Asset Quality Remains Stable

Bajaj Finance Ltd.’s quarterly profit beat estimates as it booked a greater number of new loans.

Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Bajaj Finance Ltd.’s quarterly profit beat estimates as it booked a greater number of new loans.

Net profit rose 63 percent year-on-year to Rs 1,506 crore in the quarter ended September, according to the non-bank lender’s exchange filing. That’s higher than the Rs 1,434 crore estimated by analysts tracked by Bloomberg. The number of new loans booked in the three-month period rose 23 percent over the previous year to 64.7 lakh. While the total amount of money disbursed wasn’t mentioned, assets under management rose 38 percent over last year to Rs 1,35,533 crore.

Net interest income, or the non-bank lender’s core income, however, rose 41 percent to Rs 3,138 crore—much lower than the Rs 3,786-crore estimate.

The rise in new loans comes despite slowing consumption in India with economic growth at a six-year low in April-June quarter. Consumption, which contributes nearly two-thirds to gross domestic product, was hurt after a credit crunch among non-bank lenders following shock defaults by a subsidiary of Infrastructure Leasing & Financial Services Ltd. late last year.

Asset Quality

  • Gross non-performing assets ratio remained largely stable at 1.61 percent compared with 1.60 percent over the previous quarter. Net NPA ratio was 0.65 percent compared with 0.64 percent in June quarter.
  • Capital adequacy ratio (including Tier-11 capital) as of Sept. 30, was 19.68 percent.
  • Loan losses and provisions for the quarter stood at Rs 594 crore against Rs 315 crore a year ago.

Shares of Bajaj Finance pared losses and rose as much as 2 percent after the earnings announcement, compared with 0.18 percent decline in the NSE Nifty 50.

The stock has gained more than 56 percent in 2019 so far, making it the top performer in the Nifty 50 Index. Yet, Bajaj Finance was bumped out of the list of top 10 most valued firms in the country last week by State Bank of India. The NBFC is now the 11th most valued firm in India by market value.

Q2 Results: Bajaj Finance Profit Beats Estimates, Asset Quality Remains Stable
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