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Bajaj Finance Limited Q3FY25 Concoll Summary

 

Bajaj Finance Limited

Key Concall Highlights

Bajaj Finance Limited (BFL) delivered a strong Q3 FY25 performance, with record AUM growth of INR 24,119 crores and highest-ever new loan bookings of 12 million. The company remains on track to surpass 100 million customers by the fiscal year-end. BFL is now in its “3.0” phase, focusing on digital transformation, AI-driven efficiency, and expanding its strategic partnerships. Asset quality remains stable, with credit costs aligning with management expectations.

Financial Performance and Key Metrics

  • AUM Growth: 28% YoY growth, reaching INR 398,000 crores, driven by strong loan originations.
  • New Loans Booked: 12 million, a record high for the company.
  • Customer Franchise: Total customers reached 97.12 million, with a clear trajectory toward 100 million by March 2025.
  • Net Interest Income (NII): Grew 23% YoY, supporting profitability.
  • Net Total Income (NTI): Grew 26% YoY, with Opex to NTI improving to 33.1%.
  • Profitability:
    • PBT: INR 5,765 crores (+18% YoY).
    • PAT: INR 4,308 crores (+18% YoY).
    • ROE: 19.1%, reflecting strong returns.
  • Asset Quality:
    • Gross NPA: Stable within management’s medium-term guidance.
    • Net NPA: 48 basis points, reflecting disciplined risk management.
  • Credit Costs:
    • Loan Loss to Average AUF (Q3): 2.16%.
    • Loan Loss to Average AUF (Q4 Guidance): Expected to decline to 2.0%-2.05%.
    • FY25 Target: Management aims to bring credit costs below 2%.

Segment Performance

  • Consumer Finance: Urban B2C remains strong, while Rural B2C has seen an increase in Stage 2 assets.
  • Business & Professional Loans: Classified as “yellow”, indicating slight stress.
  • Two-Wheeler & Three-Wheeler Financing: Declining due to Bajaj Auto’s captive NBFC; portfolio expected to stabilize at 3.5%-4% by FY26.
  • SME Lending: Improving bounce rates and normalizing collection efficiencies.
  • Car Loans: New car loans remain strong, while used car loans face pressure due to reduced volumes.

Strategic Initiatives & Partnerships

  • Digital & AI Transformation: Investments in AI to enhance operational efficiency, risk management, and customer engagement.
  • Bharti Airtel Partnership:
    • Targeting 200 million non-overlapping customers.
    • Two products launched, with nine more set to go live by March 2025.
  • Co-Branded Credit Cards:
    • Discontinuing incremental sourcing of RBL Bank and DBS co-branded credit cards.
    • Existing customers remain unaffected; BFL retains revenue from distribution fees.
  • Gold Loan Expansion:
    • Branch network crossed 1,000 locations, focusing on Tier 3 & Tier 4 cities.

Asset Quality & Risk Management

  • Credit Costs: Expected to decline in Q4 and stay below 2% in FY25.
  • Proactive Risk Reduction:
    • Cutting exposure to high-risk unsecured segments.
    • Aiming to bring 3+ unsecured loan category back to pre-COVID levels by Q4.
  • Debt Management:
    • Digital-first approach, 48% collections now handled digitally.

Outlook & Key Takeaways

  • AUM Growth: Management targets ~25% YoY growth for FY26.
  • Profitability: 22%-23% PAT growth expected in the next fiscal.
  • NIM Management: Stable NIM outlook, with 4-5 bps fluctuation in cost of funds.
  • Management Transition: The board will decide on leadership changes by Q4 FY25.

Bajaj Finance remains focused on balancing risk, margin, and growth, with risk management as the top priority. The company’s digital transformation, strong asset growth, and strategic partnerships position it well for long-term value creation.

We are not SEBI registered; this is not a buy or sell recommendation. This is only Concall Summary.

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