Bajaj Finance Ltd. Q2FY25 Result First Cut – Strong Growth in NII, PAT, and AUM; Asset Quality declines

By-Manish Chowdhury,  Head of Research, Stoxbox

– Net interest income (NII) stood at Rs. 8,838 crores in Q2FY25, up 5.65% QoQ / up 23% YoY.
– Loan losses and provisions for Q2FY25 were Rs. 1,909 crores as against Rs. 1,077 crores in Q2FY24.
– Consolidated Profit after Tax increased to Rs. 4,014 crores in Q2FY25, up 2.61% QoQ / up 13.04% YoY.
– Gross NPA increased to 1.06% in Q2FY25, up 20bps QoQ / up 15 bps YoY.
– Net NPA stood at 0.46% in Q2FY25, up 8bps QoQ / up 15bps YoY.
– Deposits book stood at Rs. 66,131 crores (up 5.04% QoQ / up 20.63% YoY) as on 30 September 2024. Deposits contributed to 20% of consolidated borrowings as of 30 September 2024.
– Assets under management (AUM) grew to Rs.3,73,924 crores as of 30 September 2024 from Rs. 3,54,192 crores as of 30 June 2024 and Rs. 2,90,264 crores as of 30 September 2023, up 5.57% QoQ/ up 29% YoY. New lines of businesses have started contributing 2%-3% of AUM growth. AUM composition on YoY basis remained stable.
– Capital adequacy ratio (including Tier-II capital) as of 30 September 2024 was 21.69%.
– In Q2, the Company added 43 new locations and 8.6K distribution points. Geographic presence stood at 4,245 locations and over 215K active distribution points as of 30 September 2024.
– BHFL successfully concluded its Initial Public Offer (IPO) of Rs. 6,560 crore. This included issuance of new equity shares amounting to Rs. 3,560 crores and an offer for sale by BFL amounting to Rs. 3,000 crores. BHFL equity shares were listed on stock exchanges on 16 September 2024. Consequently, BFL’s shareholding in BHFL reduced from 100% to 88.75%.

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Bajaj Finance’s Q2FY25 results demonstrated robust performance, showcasing strong growth in Net Interest Income, Profit After Tax, and Assets Under Management. The company experienced a notable pickup in new loan bookings and customer franchise during the current quarter. Moreover, it maintains the highest credit rating in terms of its long-term debt program, reflecting investor confidence. However, asset quality remains a concern, as both GNPA and NPA have slightly deteriorated this quarter. Additionally, the increase in loan provisions highlights ongoing worries about asset quality on a YoY basis. Notably, the company successfully raised approximately ₹6,560 crores from the public issue of its subsidiary, Bajaj Housing Finance Ltd. With its extensive experience in the lending sector, Bajaj Finance has demonstrated long-term profitability. We remain optimistic that the NBFC will effectively manage slippages and enhance its asset quality moving forward. The upcoming festive season is expected to drive healthy growth, further supporting the company’s momentum. In conclusion, Bajaj Finance is well-positioned to capitalize on its growth trajectory, with expectations of improved profitability and asset quality in the upcoming quarters, despite the challenges posed by credit quality in this quarter.