Bajaj Finance gains 4% on strong sequential AUM growth in December quarter

Shares of Bajaj Finance ( up 4 per cent at Rs 7,659) and Bajaj Finserv (up 5 per cent at Rs 18,044) gained up to 5 per cent on the BSE in Wednesday’s intra-day trade after Bajaj Finance reported healthy customer acquisition with 2.6 million new customers added during the October-December quarter (Q3FY22). Customer franchise, as on Q3FY22, stood at 55.4 million, as compared to 46.3 million at the end of Q3FY21.

Bajaj Finance, a subsidiary of Bajaj Finserv, is a non-banking financial company (NBFC). In the past three months, Bajaj Finance has underperformed the market by falling 1 per cent, as compared to a 0.76 per cent rise in the S&P BSE Sensex. Bajaj Finserv, meanwhile, was up 0.9 per cent during the same period.

In Q3FY22, Bajaj Finance’s assets under management (AUM) grew 8.6 per cent quarter on quarter (QoQ) to Rs 1.81 trillion (+26 per cent YoY). AUM, in the reported quarter, adjusted for IPO financing receivable grew by approximately Rs 14,500 crore, Bajaj Finance said in its Q3 business update.

The company said it has not witnessed any adverse impact on its NPA position due to transition to a new method of NPA recognition as clarified by the Reserve Bank of India (RBI) in November 2021.

Brokerage ICICI Securities believes that a spur in loans, customer addition and no adverse impact of transition on asset quality will be beneficial for the company and reflect in its Q3FY22 earnings as well.

“In our view, the company has witnessed healthy traction across product segments (except maybe auto finance where the company has been intentionally slowing down). Absolute customer acquisition run-rate surpassing pre-COVID levels while the quarterly run-rate growth of the total customer franchise was broadly at the same levels as the last four quarters”, said Motilal Oswal Financial Services. 

Q3FY22 business update seems to suggest that there has been a rapid normalization across business segments and this trajectory could continue in Q4FY22 as well (even though a major third COVID wave could play a spoiler), the brokerage firm said.