In an interaction with ETNow, Dipan Mehta, Director at Elixir Equities, added to this sentimemts stating that he was ‘disappointed’ with the results despite the strong pre-provisioning profit.
“Every time we expect that the pre-provisioning profit is fine, but the actual NPA provision rising by 70-odd per cent or 78%, if I am not mistaken, that really has a big dent on the profitability,” he noted. Mehta added that while the NPA provision was expected to align with the growth in pre-provisioning profits, that has not been the case for several quarters.
Commenting on valuations, Mehta said, “The stock is not cheap. It trades at 34-35 times trailing 12-month earnings per share. So, from that point of view, it is well priced.” He acknowledged the company’s strengths and positive bias from investors but cautioned that “unless we have some major improvement on the NPA provisioning side,” profitability could continue to face headwinds.
For the full year FY25, Bajaj Finance reported a consolidated net profit of Rs 16,779 crore, a rise of 16%, while pre-provisioning operating profit (PPOP) grew 24% to Rs 30,028 crore.
Mehta also highlighted concerns over moderating growth. “When I bought the stock, it was 40-50%, has now effectively come down to about 14-15%. I would say on a longer-term basis, maybe 16% or so,” he stated, referring to earnings potential.Also read: Empowering retail investors in India’s F&O market: A graphic-first approach to intuitive investingWhile the AUM growth of 24–25% is notable, Mehta warned that “even the growth in the AUM will get more and more challenging two-three years down the line or even two-three quarters down the line.”
Meanwhile, the company’s net interest income (NII) rose 22% YoY to Rs 9,807 crore, driven by healthy loan growth, improved margins, and stable asset quality. Consolidated assets under management (AUM) stood at Rs 4.16 lakh crore, up 26% from Rs 3.3 lakh crore a year ago. New loans booked surged 36% YoY to 10.7 million during the quarter.
Around 2 pm on Wednesday, Bajaj Finance shares were trading 4.69% lower at Rs 8,663 on the BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
