The larger question, though, is that of growth. Given the visible increase of stress in digital product financing, lending to small businesses and even consumer durable loans, Bajaj Finance
has decided to go cautious. Fresh disbursement growth targets have been moderated to 10–18 per cent in these segments.
Known for its ability to sustain 40 per cent plus growth in assets under management (AUM), how much a likely moderation in disbursement will affect AUM growth needs to be seen. “Incoming data on risk will tell us what our growth target should be,” says a cautious Rajeev Jain, MD, Bajaj Finance.
That said, other aspects such as cost of capital at 8.5 per cent and net interest margins at nine per cent remain in a comfortable zone.
Going ahead, loan growth and asset quality (a factor which may weaken if loan growth melts a bit) will be the key guiding aspects for the Street. Whether investors will continue to pay top dollars for the stock if these come under pressure, needs to be seen. Indications of this will come after the analysts call on Friday; whether brokerages tweak their earnings estimates and recommendations, and by how much.
Trading at 8x FY20 estimated book, it remains the most expensive non-banking finance stock.