What Are the Key Highlights of Bajaj Finance’s Q1 FY25 Earnings?
Bajaj Finance, a leading non-banking financial company (NBFC), announced its financial results for the quarter ended June 30, 2024 (Q1 FY25) on Tuesday. The company reported a 14% year-on-year (YoY) increase in net profit to Rs 3,912 crore, compared to Rs 3,437 crore in the corresponding quarter of the previous fiscal year (Q1 FY24).
However, the earnings fell short of analyst expectations, causing the stock to slip over 2% in early trade on Wednesday.The company’s total revenue for the quarter stood at Rs 16,098 crore, a significant increase from Rs 12,497 crore in Q1 FY24. Net interest income (NII) grew by 25% YoY to Rs 8,365 crore, up from Rs 6,717 crore in the same quarter last year.
How Did Bajaj Finance’s AUM and New Loans Perform in Q1 FY25?
Bajaj Finance’s assets under management (AUM) witnessed a robust 31% YoY growth, reaching Rs 3.54 lakh crore as of June 30, 2024, compared to Rs 2.70 lakh crore in Q1 FY24. The company’s new loans booked during the quarter also saw a 10% increase, with 1.09 crore loans disbursed against 0.94 crore in the corresponding quarter of the previous year.
| Key Metrics | Q1 FY25 | Q1 FY24 | YoY Growth |
|---|---|---|---|
| Net Profit | Rs 3,912 crore | Rs 3,437 crore | 14% |
| Revenue | Rs 16,098 crore | Rs 12,497 crore | 29% |
| NII | Rs 8,365 crore | Rs 6,717 crore | 25% |
| AUM | Rs 3.54 lakh crore | Rs 2.70 lakh crore | 31% |
| New Loans | 1.09 crore | 0.94 crore | 10% |
What Contributed to Bajaj Finance’s Growth in Q1 FY25?
Several factors contributed to Bajaj Finance’s growth in the first quarter of the fiscal year 2025. The company resumed sanctioning and disbursing loans under its ‘eCOM’ and ‘Insta EMI Card’ programs, as well as issuing EMI cards, after the Reserve Bank of India (RBI) lifted restrictions on these businesses on May 2, 2024.
The company’s customer franchise also expanded significantly, reaching 88.11 million as of June 30, 2024, compared to 72.98 million a year ago, representing a 21% YoY growth. In Q1 FY25 alone, Bajaj Finance’s customer base grew by 4.47 million.
How Did Bajaj Finance’s Loan Portfolio Perform Across Different Segments?
Bajaj Finance witnessed substantial growth across various loan segments. The portfolio of loans for two and three-wheeler finance increased by 34% to Rs 19,689 crore. The company also recorded a massive 157% increase in its car loan portfolio, which reached Rs 8,710 crore.
What Is the Asset Quality and Provisioning Status of Bajaj Finance?
As of June 30, 2024, Bajaj Finance’s gross non-performing assets (NPAs) stood at 0.86%, while net NPAs were at 0.38%, compared to 0.87% and 0.31%, respectively, as of June 30, 2023. The company maintains a provisioning coverage ratio of 56% on stage 3 assets.
| Asset Quality Metrics | June 30, 2024 | June 30, 2023 |
|---|---|---|
| Gross NPAs | 0.86% | 0.87% |
| Net NPAs | 0.38% | 0.31% |
What Are the Analyst Recommendations and Price Targets for Bajaj Finance Post Q1 Results?
Following the Q1 FY25 results, several brokerages have revised their ratings and price targets for Bajaj Finance:
- Motilal Oswal maintained a neutral stance and assigned a price target of Rs 7,500, an 11% upside from the previous close.
- Jefferies retained its ‘Buy’ rating but trimmed the price target to Rs 7,780 from Rs 9,260, citing a sharper rise in credit costs as a major drawback.
- Citi also cut its price target to Rs 8,275 but maintained a ‘Buy’ rating, noting that core earnings missed expectations due to a fall in net interest margins (NIMs) and elevated credit costs.
What Is the Market Reaction to Bajaj Finance’s Q1 FY25 Results?
Bajaj Finance shares fell 2.55% to Rs 6,560 on Wednesday following the announcement of the Q1 FY25 results, which missed analyst estimates. The company’s market capitalization slipped to Rs 4.08 lakh crore, with 0.40 lakh shares changing hands, amounting to a turnover of Rs 26.23 crore on the Bombay Stock Exchange (BSE).
What Is the Outlook for Bajaj Finance?
Despite the mixed market reaction to the Q1 FY25 results, Bajaj Finance remains well-positioned for growth in the coming quarters. The company’s strong AUM growth, expanding customer base, and diversified loan portfolio are expected to drive its future performance.
However, investors should keep an eye on credit costs and NIMs, as these factors could impact the company’s profitability in the near term.
What Are the Key Takeaways from Bajaj Finance’s Q1 FY25 Earnings?
- Bajaj Finance reported a 14% YoY increase in net profit to Rs 3,912 crore, falling short of analyst expectations.
- The company’s AUM grew by 31% YoY to Rs 3.54 lakh crore, while new loans booked increased by 10%.
- NII rose 25% YoY to Rs 8,365 crore, and the customer franchise expanded by 21% to 88.11 million.
- Bajaj Finance resumed loan disbursals and EMI card issuance after the RBI lifted restrictions in May 2024.
- Asset quality remained stable, with gross NPAs at 0.86% and net NPAs at 0.38% as of June 30, 2024.
- Brokerages have revised their price targets for the stock, with most maintaining a positive outlook despite the mixed Q1 results.
In conclusion, Bajaj Finance’s Q1 FY25 earnings demonstrate the company’s resilience and growth potential, despite facing challenges such as rising credit costs and falling NIMs.
As the company continues to expand its customer base, diversify its loan portfolio, and leverage its strong market position, it is well-equipped to navigate the dynamic financial landscape and deliver long-term value to its shareholders.
