Bajaj Finance shares tank as investors mourn fewer borrowers and low margin

However, the quarterly net profit fell short of Street estimates, dented by a dip in borrowing and in the margin.

The company's net interest income (NII) -- or the difference between interest earned and interest paid -- jumped 30 percent on year to Rs 6,068 crore.

Analysts in a CNBC-TV128 poll had estimated the company's net profit at Rs 2,442.1 crore and NII at Rs 5,332.3 crore. 

Bajaj Finance's calculated net interest margin (NIM) - a key metric to measure a lender's profitability - declined to 12.29 percent in the January-March period from 13.24 percent in the previous quarter.

However, its asset quality improved, with gross non-performing assets as a percentage of total loans returned to pre-COVID levels, coming down by 13 basis points sequentially to 1.6 percent.  

The Bajaj Finance stock had jumped on Tuesday ahead of the earnings announcement.

CLSA retained a 'sell' rating on the Bajaj Finance stock citing rich valuations, and cut its target price to Rs 6,000 from Rs 6,500 earlier.

The brokerage lowered its earnings per share (EPS) forecast for the company by eight percent and nine percent for the years ending March 2023 and March 2024 respectively.

Deven Choksey of KRChoksey told CNBC-TV18 he remains convinced about the company's business prospects.

"Bajaj Finance has never been a cheap stock. It has always been trading at a premium. The typical characteristic of this company is that wherever it has a price-to-book value of about 6-6.5, it immediately would monetise some of the holding and strengthen its balance sheet... If the premium valuation persists, it would have the typical requirement of raising funds," he said.