India's Bajaj Finance falls on profit growth concerns

BENGALURU (Reuters) - Shares of Bajaj Finance fell the most in 16 months on Friday after the Indian non-bank lender forecast slower asset rise and weaker margins, leading to concerns over profit growth.

Bajaj Finance on Thursday forecast its assets under management to grow between 26%-28% in the fiscal year that started April 1, compared with 34% growth in the previous year and said its net interest margin will fall 30-40 basis points over the next two quarters.

Its shares dropped 7% to a one-month low of 6,825 rupees on Friday, and were on course for the steepest intraday percentage fall since January 2023.

Bajaj Finance was the worst performer on the benchmark Nifty 50 index, which was down 0.1%. The shares are down nearly 7% this year compared with a 0.2% fall in the Nifty financial index and about 4% gain for the Nifty 50.

Bajaj Finance reported a 21% rise in fourth-quarter profit and said it was "cautiously optimistic" about fiscal year 2025 profit growth, which could be more "rear-ended".

Multiple analysts trimmed their profit and net interest margin forecasts for the lender for this and the next financial year.

At least eight analysts cut their price targets, as per LSEG data, with the median price target trimmed to 8,675.5 rupees from 8,800 rupees a month earlier.

HSBC analysts trimmed their earnings per share estimates by 13%-17% for the two fiscal years due to lower growth, sustained pressure on cost of funds and a lower rural-loan mix.

"Going forward, we believe funding cost pressures may persist for longer too and company's earnings may be under pressure for some quarters," HSBC analysts said.

Bajaj Finance also dragged shares of its holding company Bajaj Finserv nearly 3% lower.

(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala)