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Bajaj Finance Ltd has continued its upward movement for two straight days, and hit a new high of Rs 6,228.60, up 2 per cent on the BSE. The stock of the non-banking finance company has rallied 10 per cent in the past two days on hopes that B2B and auto finance businesses will do much better with the reopening of the economy.
The stock of Bajaj Finance had corrected 6 per cent in the four days prior to Thursday as it slipped from its previous high of Rs 6,009 on June 4, 2021, to Rs 5,674 on June 9, after the consumer financier voiced concerns over asset quality issues due to localized lockdowns following the second wave of Covid-19. After reporting a healthy performance in Q4FY21, management of Bajaj Finance in a mid-quarter update indicated some adverse impact of Covid-19-related fresh lockdowns on business during the April-June quarter (Q1FY22). The company indicated that its B2B and auto finance businesses were most affected due to strict lockdowns in the majority of states.
“The company estimates an impact of Rs 4,000-5,000 crore to its AUM growth plan for FY2022 on account of the disruption caused by the second wave. However, Q1FY2022 will see a higher impact on assets under management (AUM) due to lower volumes in B2B businesses. The company has taken several actions to reduce its operating expenses and cost of funds to partially mitigate the financial impact caused by lower AUM growth,” Bajaj Finance said in a mid-quarter update on Friday, June 4, aftermarket hours.
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B2B and auto finance businesses were most affected due to strict lockdowns in the majority of states. These businesses delivered 70 per cent of their planned volumes in April 2021 as multiple states started imposing lockdowns from the middle of that month. Their volumes dropped to 40 per cent in May 2021. Most states have indicated continued lockdown till 7th or 15th June. With the expected reopening, June should be much better, the company said.
Stock Covered in the news
