Bajaj Finance nears record high ahead of Q4 results; up 6% in two days

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Bajaj Finance shares rose 2 per cent at Rs 3,060, gaining 6 per cent in the past two trading days on the BSE in an otherwise weak market ahead of January-March quarter earnings (Q4FY19) today.

The stock was trading close to its record high level of Rs 3,162, which it achieved on on May 3, 2019, in intra-day trade. At 10:31 am,  the S&P BSE Sensex was trading flat at 37,109, down nearly 1 per cent in the past two trading days.

Since January 28, post December quarter (Q3FY19) results, Bajaj Finance has outperformed the market by surging 25 per cent from the level of Rs 2,456. In comparison, the benchmark index was up 4 per cent during the same period.

According to rating agency CRISIL, Bajaj Finance's asset-liability profile is comfortable. As on March 21, 2019, till August 31, 2019, the company has debt repayments of Rs 12,540 crore of which commercial paper repayments are around Rs 7,695 crore. As March 21, 2019, it has cash and cash equivalents of Rs 3,525 crore and unutilized bank lines of Rs 4,202 crore.

Bajaj Finance's liquidity profile also benefits from the high proportion of shorter-tenor assets such as consumer durables; it has significant positive gaps in its ALM, indicating that business inflows support repayments, CRISIL said in a rating rational on April 5, 2019.

Analysts at Narnolia Financial Advisors expect Bajaj Finance’s profit after tax to grow at the rate of 55 per cent year-on-year. Rise in operational efficiency will result in decline of cost to income or C/I ratio going ahead.

“Net Income growth is expected to be 40 per cent in Q4FY19 driven by strong assets under management (AUM) growth. The strong growth AUM is expected to be driven by rural portfolio. Loan growth is expected to remain strong at 45 per cent in Q4FY19. Management has also guided to maintain liquidity cushion in the balance sheet which may slightly affect net interest margin (NIM) in Q4FY19,” the brokerage firm said in results preview.

“In line with seasonal trends, we expect loan growth to moderate to 7 per cent quarter on quarter (qoq) from 10 per cent qoq in Q3FY19. NIM will likely moderate to 11.1 per cent, down from 12 per cent in Q3FY19, due to lower share of the high-margin consumer business, in line with seasonal trends,” Kotak Securities said in earnings preview.

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