Bajaj Finance sinks 8% amid rising NIM pressure

Brokerages bearish, anticipate NIM compression in FY25

- NIKITA VASHISHT

Investors shunned shares of Bajaj Finance on Friday, a day after the non-banking financial company (NBFC) reported a sharp contraction in its net interest margin (NIM) for the March quarter of the financial year 2023-24 (Q4FY24). The shares crashed 8.2 per cent intraday, before settling 7.7 per cent lower at ₹6,730 apiece on the BSE. The losses accounted for a fifth of the benchmark S&P Sensex's 609-point loss.

BSE Most brokerages have tamed their earnings expectations for the next couple of quarters, after the management said it expected the pressure on NIMS to continue in the near term.

"While the management maintained its asset under management (AUM) growth guidance at 26-28 per cent in FY25, likely net interest margin (NIM) compression in H1FY25 and revised credit cost to 1.85 per cent versus 1.7 per cent pre-Covid is likely to keep earnings under pressure during H1FY25," said analysts at ICICI Securities.

Bajaj Finance's NIM in Q4FY24 contracted by 20 basis points (bps) to 10 per cent on a quarter-on-quarter (Q-o-Q) basis due to an increase in the cost of funds (CoF) and a gradual shift in AUM composition towards secured assets.