Bajaj Finance shares surge over 6% as assets, customers rise, belying NBFC sector troubles

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Published: July 9, 2019 2:28:25 PM

Shares of Bajaj Finance rose more than 6 per cent after it reported stellar growth in its assets under management (AUM) for the first quarter of FY 20 amid challenging situation in the NBFC sector and the fears of a global economic slowdown.

Bajaj Finance PAT grows 57% in Q4 despite challenging conditions faced by NBFCs (Website image)Bajaj Finance shares rise more than 6 per cent after it reports stellar growth in its AUM for Apr-Jun

Shares of Bajaj Finance rose more than 6 per cent after it reported stellar growth in its assets under management (AUM) for the first quarter of FY 20 amid challenging situation in the non-banking finance companies or NBFC sector and the fears of a global economic slowdown. Bajaj Finance reported a 41 per cent growth in its AUM by 41 per cent year-on-year basis and by 11.3 per cent on a quarterly basis. The company has also reported an acquisition of 2.5 million new customers. The company’s shares had opened flat on Tuesday morning at Rs 3,414.75 per share.

The NBFC’s customer franchise as of June 30, 2019, stood at around 36.9 million as against 28.3 million as of June 30, 2018. Bajaj Finance acquired 2.5 million new customers in the first quarter, its new loans booked during Q1 of FY20 also grew to 7.3 million as compared with 5.6 million in the same quarter of FY19. Its assets under management (AUM) stood at around 129,000 crores as of June 30, 2019, as compared to 91,287 crores as of June 30, 2018, and 115,888 crores as of March 31, 2019, the company said in an exchange filing. 

Bajaj Finance shares plummeted sharply by 8 per cent on Monday on the back of economic slowdown concerns. In an interaction with CNBC TV18, on Monday, Bajaj Finance’s Managing Director Sanjiv Bajaj raised concerns over a slowdown in consumer demand despite the busy season and ongoing ICC World Cup in England and Wales. Bajaj said the television sales are lower than last year, which is quite unusual when the Cricket World Cup is going on. He also pointed towards slowdown in SME and rural lending.

In a bid to improve liquidity in the NBFCs, the government in its Union Budget 2019-20 proposed a one-time six-month partial credit guarantee to PSU banks for the first loss of up to 10per cent. The Central Bank allowed banks to reduce liquidity coverage ratio to the extent of Rs 1.34 lakh crore and lend to NBFCs after the Finance Minister announced the budget for the current fiscal in the second tenure of Prime Minister Narendra Modi

“For purchase of high-rated pooled assets of financial sound NBFCs amounting to a total of Rs1 lakh crore during the current financial year, the government will provide a one-time six-month partial credit guarantee to public sector banks for the first loss of up to per cent,” Finance Minister Nirmala Sitharaman said Friday while presenting the budget in Lok Sabha. 

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