Bajaj Finance jumps by 10%; most in two years as profit tops estimates

Shares of Bajaj Finance on Thursday surged 10 per cent, the most in more than two years, after its quarterly profit blew past estimates on strong customer additions and lower bad loan provisions

BENGALURU (Reuters) -Shares of Bajaj Finance on Thursday surged 10%, the most in more than two years, after the non-bank lender's quarterly profit blew past estimates on strong customer additions and lower bad loan provisions.

The company on Wednesday said its profit more than doubled to 25.96 billion rupees ($325.37 million), beating expectations of 24.41 billion rupees, as loan loss provisions slid 57%.

Bajaj Finance said it was focusing on protecting its margins, amid increasing competition in the sector.

"The company has started increasing pricing across products gradually from June 2022," it said in a statement https://www.bseindia.com/xml-data/corpfiling/AttachLive/966d6613-d2b4-4066-b68c-4eace44b5a2a.pdf, adding new loans booked surged 60.3% from a year earlier.

"Customer acquisitions and new loans trajectory has been strong and the momentum will only get stronger with the digital ecosystem - app, web platform and the full-stack payment offerings," Motilal Oswal analysts said in a note.

Bajaj Finance said it was on track to offer all products and services on app by January 2023.

Management's guidance of achieving 4 trillion rupees in assets under management (AUM) looks strong and we expect significant loan growth acceleration on the back of steady economic growth, Morgan Stanley analysts wrote in a note.

At the end of the June-quarter, AUM was up 28% at 2.04 trillion rupees.

Shares of Bajaj Finserv, Bajaj Finance's holding company, climbed 9.2% after it approved a bonus share issue and a stock split as its profit jumped.

Bajaj Finance shares, down 8.3% so far this year as of last close, were the top boost to the blue-chip Nifty 50 index.

($1 = 79.7850 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; editing by Uttaresh.V and Vinay Dwivedi)