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    Bajaj Finance: Expect improvement from Q3, Q4 onwards

    Synopsis

    Long term, the management and the company is quite capable of overcoming all the hurdles, says Gaurang Shah.

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    There could be a little bit of speed breakers in the path of recovery for Bajaj Finance, says Gaurang Shah, VP, Geojit Financial Services.

    On Bajaj Finance numbers
    Post the first quarter numbers, the commentary from the management was that for the second quarter, there could be a little bit of downward move as far as the bottom line is concerned and that is what is exactly reported. The good side is that the gross and the net NPAs have come on the lower side. On the net interest income side, there is a better than expected number. But yes the provisioning is something that we will possibly know in detail once the commentary from the management is out.

    A disclosure, we have a positive coverage on Bajaj Finance from a long term point of view. The stock slipped to close to Rs 1,900 when the market was on its low and then it has recovered quite smartly. We are quite excited about the business model for Bajaj Finance and from the third, fourth quarter onwards, there should be improvement coming through.

    On valuations
    For NBFCs with a little bit of focus on semi-urban and rural India, there tends to be a little bit of concern during these times. I would not be surprised if there is a little bit of selling pressure given the kind of numbers that have been reported in the short to medium term. Long term, the management and the company is quite capable of overcoming all the hurdles and that is what we reflected upon in our research report when the stock corrected and then there was a pullback. There could be a little bit of speed breakers in the path of recovery but the recovery seems to be there.
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