Bajaj Finance Limited (BFL) has reported a robust performance for the first quarter, with significant growth in profits and assets under management (AUM). However, the company's shares fell 6.15% on Friday, marking the largest decline since Jan. 5, 2023, following the release of quarterly results.

Key Financial Highlights

• Consolidated profit after tax increased by 22% to ₹4,765.00 crore, compared to ₹3,912.00 crore in the same quarter of the previous year.
• Assets under management (AUM) grew by 25% to ₹441,450.00 crore, up from ₹354,192.00 crore a year earlier.
• Net interest income rose by 22% to ₹10,227.00 crore, while net total income increased by 21% to ₹12,610.00 crore.
• The company booked 13.49 million new loans during the quarter, a 23% increase from the previous year.
• Customer franchise expanded by 21% to 106.51 million.

Asset Quality and Capital Adequacy

Bajaj Finance's asset quality showed signs of deterioration:

• Gross NPA stood at 1.03%, compared to 0.86% a year ago and 0.96% in the previous quarter.
• Net NPA was 0.50%, up from 0.38% in the previous year and 0.44% in the previous quarter.
• The provisioning coverage ratio on stage 3 assets was 52%.
• Loan losses and provisions reached ₹2,120.00 crore, up 26% year-on-year.
• Capital adequacy ratio (CRAR) remained strong at 21.96%, with Tier-I capital at 21.19%.

Segment Performance

The company reported growth across various business segments:

Subsidiary Performance

Bajaj Housing Finance Limited (BHFL) also demonstrated strong growth:

• AUM increased by 24% to ₹120,420.00 crore.
• Net interest income grew by 33% to ₹887.00 crore.
• Profit after tax rose by 21% to ₹583.00 crore.

Bajaj Financial Securities Limited (BFinsec) reported a 37% increase in profit after tax to ₹41.00 crore, with assets under finance growing by 39% to ₹6,098.00 crore.

Management Changes

The company announced that Anup Saha resigned as MD and Director of BFL for personal reasons. Rajeev Jain has been re-designated as Vice Chairman and Managing Director to ensure continuity in leadership.

Market Reaction and Outlook

Despite the strong financial performance, Bajaj Finance shares experienced a significant drop due to concerns over deteriorating asset quality. The stock's decline reflects investor apprehension about the rising non-performing assets and increased loan losses and provisions.

However, Bajaj Finance continues to maintain its strong market position with a focus on diversified lending and robust risk management. The company's consistent growth in customer franchise and new loan bookings indicates a positive outlook for the coming quarters, despite the competitive landscape in the financial services sector.

As the company progresses with its digital transformation initiatives and expands its product offerings, it remains well-positioned to capitalize on the growing demand for financial services in India. The management will likely need to address concerns about asset quality in the coming quarters to regain investor confidence.

Bajaj Finance Limited, one of India's leading non-banking financial companies, has reported strong financial performance for the first quarter. The company's consolidated profit after tax grew by 22% year-on-year to ₹4,765.00 crore, while its assets under management (AUM) increased by 25% to ₹441,450.00 crore.

Key Financial Highlights

Business Performance

Bajaj Finance demonstrated robust growth across various business segments. The company booked 13.49 million new loans during the quarter, representing a 23% increase from the same period last year. Its customer franchise expanded to 106.51 million, growing by 21% year-on-year.

The company's AUM growth was driven by strong performance across multiple lending categories. Notable growth was observed in segments such as urban B2C loans (29% YoY), MSME lending (29% YoY), and mortgages (24% YoY).

Asset Quality and Capital Adequacy

Bajaj Finance maintained a healthy asset quality profile:

The company's capital position remained strong, with a capital adequacy ratio (CRAR) of 21.96% as of the end of the quarter. The Tier-I capital stood at 21.19%.

Subsidiary Performance

Bajaj Housing Finance Limited (BHFL), a subsidiary of Bajaj Finance, reported a 21% increase in profit after tax to ₹583.00 crore. BHFL's AUM grew by 24% to ₹120,420.00 crore.

Bajaj Financial Securities Limited (BFinsec) saw its profit after tax rise by 37% to ₹41.00 crore, with assets under finance growing by 39% to ₹6,098.00 crore.

Management Changes

The company announced that Anup Saha resigned as Managing Director, effective July 21, for personal reasons. The Board re-designated Rajeev Jain as Vice-Chairman and Managing Director, entrusting him with the operating responsibilities of the company until March 31, 2028.

Outlook

Bajaj Finance's strong quarterly performance reflects its resilient business model and ability to capitalize on market opportunities. The company's focus on diversified lending segments and robust risk management practices positions it well for continued growth in the coming quarters.

As India's economy continues to recover and credit demand rises, Bajaj Finance is well-positioned to leverage its strong market presence and digital capabilities to drive further expansion in its customer base and loan portfolio.