India's Bajaj Finance falls on profit growth concerns

Bajaj Finserv

26/04/2024 06:31

BENGALURU, April 26 (Reuters) - Shares of Bajaj Finance
 BJFN.NS  fell the most in 16 months on Friday after the Indian
non-bank lender forecast slower asset rise and weaker margins,
leading to concerns over profit growth.
    Bajaj Finance on Thursday forecast its assets under
management to grow between 26%-28% in the fiscal year that
started April 1, compared with 34% growth in the previous year
and said its net interest margin will fall 30-40 basis points
over the next two quarters.
    Its shares dropped 7% to a one-month low of 6,825 rupees on
Friday, and were on course for the steepest intraday percentage
fall since January 2023. 
    Bajaj Finance was the worst performer on the benchmark Nifty
50 index  .NSEI , which was down 0.1%. The shares are down
nearly 7% this year compared with a 0.2% fall in the Nifty
financial index  .NIFTYFIN  and about 4% gain for the Nifty 50.
    Bajaj Finance reported a 21% rise in fourth-quarter profit
and said it was "cautiously optimistic" about fiscal year 2025
profit growth, which could be more "rear-ended". 
    Multiple analysts trimmed their profit and net interest
margin forecasts for the lender for this and the next financial
year. 
    At least eight analysts cut their price targets, as per LSEG
data, with the median price target trimmed to 8,675.5 rupees
from 8,800 rupees a month earlier.
    HSBC analysts trimmed their earnings per share estimates by
13%-17% for the two fiscal years due to lower growth, sustained
pressure on cost of funds and a lower rural-loan mix.
    "Going forward, we believe funding cost pressures may
persist for longer too and company's earnings may be under
pressure for some quarters," HSBC analysts said.
        Bajaj Finance also dragged shares of its holding company
Bajaj Finserv nearly 3% lower. 
    

 (Reporting by Ashna Teresa Britto in Bengaluru; Editing by
Mrigank Dhaniwala)
 ((AshnaTeresa.Britto@thomsonreuters.com;))