Historically, the April-June quarter (Q1) is the largest contributor to assets under management (AUM) growth for Bajaj Finance, with roughly 40 per cent contribution to the total AUM growth, which will be a wash-out quarter during FY21. Also, the Reserve Bank of India (RBI) moratorium poses a greater risk for Bajaj Finance
by providing longer disruption in the financial discipline of low-income borrowers of the company.
Analysts at Emkay Global Financial Service expect further clarity on growth and asset quality only after the lockdown and moratorium period (most likely post Q1FY21 earnings). The brokerage firm expects stock performance to be muted till then. Post the crisis, Bajaj Finance
may have a revised growth trajectory (sub around 30 per cent), considering its current AUM size and the limited scope for asset expansion, the brokerage firm said in stock update.
Last week, S&P Global Ratings revised the outlook on Bajaj Finance to negative and affirmed the 'BBB-/A-3' ratings.
“The negative outlook on Bajaj Finance reflects our view that there is a one-in-three chance that we will lower the rating over the next 12 months due to rising economic risks in the Indian financial sector. We do not factor any extraordinary support from the group given that the group entities are regulated or listed entities, which restrict their ability to provide support to Bajaj Finance in the case of an extraordinary event,” S&P Global Ratings said in release dated April 17.
The rating agency further said it may downgrade Bajaj Finance if they believe that the current economic crisis is sharper and longer than they envisage such that it substantially weakens the company's asset quality and sharply increases its credit costs beyond our expectations. The agency may revise the outlook to stable if economic risks reduce and the credit profiles of both Bajaj Finance and group companies don't deteriorate materially, it added.