Shares of Bajaj Finance plunged nearly 5% to the day’s low of Rs 6,840.50 on the NSE on Tuesday after the company reported higher loan losses and provisions for the quarter ended December 31, 2023.

Following the earnings, brokerage Macquarie reiterated its ‘Neutral’ stance while Jefferies and PhillipCapital gave ‘Buy’ ratings.

Bajaj Finance on Monday reported 22% growth in its consolidated net profit at Rs 3,639 crore for the third quarter ended December 2023, which was slightly below expectations. The profit stood at Rs 2,973 crore in the last-year period. An ET Now poll estimated the profit to be around Rs 3,750 crore

Read more: Bajaj Finance Q3 Results: Net profit rises 22% YoY to Rs 3,639 crore, but misses estimates

Here’s what brokerages recommended:

Macquarie: Neutral | Target: Rs 8,100

Macquarie has maintained a ‘Neutral’ stance on the counter for a price target of Rs 8,100. The company’s PAT was in-line with its expectations with higher credit costs offset by a lower-than-expected margin decline. The pace of NIM compression was slower than expected, this brokerage said, adding that the credit costs will likely increase as delinquencies normalise.

Jefferies: Buy | Target: Rs 9,400

Jefferies has retained its buy rating on Bajaj Finance for a price target of Rs 9,400, a marginal cut from an earlier target of Rs 9,470. Still, the target suggests an over 31% upside for the stock.The company’s 3QFY24 profit a was tad ahead of estimates, Jefferies said, adding that strong AUM growth of 35% and better NIMs aided a 29% rise in NII.

The disappointment was on the asset quality front due to slippage in personal loans.

The embargo on EMI card stays and Bajaj Finance could submit revised standards to RBI in 4Q, the US-based brokerage expected saying that it will watch the progress in credit cards.

PhillipCapital: Buy | Rs 10,000

PhillipCapital left its estimates largely unchanged for FY24/25/26 as it maintained a buy view. The estimated target is Rs 10,000 which is a 39% upside on the Monday closing price.

“In our view, Bajaj Finance is well capitalised and has enough liquidity to weather any event risk,” the brokerage note said.

In key takeaways from 3QFY24, the loan growth was on a steady footing with the asset under management (AUM) growing by 35% YoY owing to strong loan volumes across segments, the brokerage noted, adding that this marks the ninth quarter of 25%+ loan growth, since covid-hit slowdown.

Despite calculated spreads, Q3 saw a mild decline of 40 bps sequentially at 11.4% while the net interest income (NII) increased by 29% YoY to Rs 7,650 crore. “We expect NII to largely flow into operating profit with non-interest income largely off-setting opex,” the brokerage note said.

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