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Valuations have stagnated so far this year with share down 5% since January, a clear reflection of asset quality concerns. For Bajaj Finance to reverse this trend on valuations, it would need to deliver on asset quality. In other words, there is improvement, but it is slow. Even so, the odds against this growth trajectory have risen because of the second wave of infections now. Regional lockdowns are increasing and Maharashtra’s strict state-wide lockdown for a month has the potential to hit consumption. Most of all analysts worry that the pandemic’s resurgence could hit asset quality again. Those at Credit Suisse are watching out for an increase in provisioning and credit costs for Bajaj Finance in the upcoming quarters.
Subscribe to Mint Newsletters Given that Bajaj Finance has been able to hook more and more customers onto easy equated monthly instalments, the growth in asset under management has improved. AUM growth was 4% year-on-year and 6% on a sequential basis. Analysts at Morgan Stanley pointed out that AUM growth has exceeded expectations. “We expect the company to have seen healthy traction in consumer B2B (business to business) loans and commercial loans. We also expect a gradual uptick in mortgage loans and consumer B2C (business to consumer),” analysts at Motilal Oswal Financial Services Ltd said in a note.
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