Bajaj Finance has wind in its sails

livemint.com:

₹8,043 on Wednesday, before closing about 1% lower. The latest business update of the non-banking financial company for the three months ended September (Q2FY24) suggests it is set to see yet another strong quarter performance. This, in turn, could pave the way for earnings upgrades.

The quarterly run rate for new customer additions continued to be above three million for the fourth consecutive time last quarter. As of September end, the total customer franchise and deposit book stood at 76.6 million and ₹54,800 crore, respectively. These measures saw a growth of around 22% and 39%, respectively, on a year-on-year basis.

While new loans booked during the quarter grew by 26% year-on-year, the metric was lower sequentially. Given this, the growth in Bajaj Finance’s assets under management (AUM) is on an uptrend, rising by 33% year-on-year to ₹2.9 trillion as on September end. This suggests that disbursements were strong in most product segments, including two-wheelers across multiple original equipment manufacturers, said analysts at Motilal Oswal Financial Services.

For perspective, Bajaj Finance’s AUM growth rates as of June and March end were 32% and 25%, respectively. Now, it is worth mentioning that the steady performance is even before the festive season has brought its cheer. As such, there are tailwinds for customer additions with consumers potentially making purchases during the festivals.

This, in turn, is good news from the AUM perspective. This also means that if Bajaj Finance maintains the steady pace of execution in the second half of FY24, then further re-rating in the stock cannot be ruled out. To be sure, there are a few headwinds ahead and one of them is the expected softness in margin.