Introduction
Bajaj Finance, India’s largest non-banking financial company (NBFC), reported strong Q1 FY26 (April–June 2025) results, with 22% YoY growth in net profit and 25% expansion in assets under management (AUM). However, rising non-performing assets (NPAs) and elevated credit costs raised concerns about asset quality.
This detailed analysis covers:
✅ Key financial highlights
✅ Loan growth & customer acquisition trends
✅ Asset quality & provisioning risks
✅ Management commentary & future outlook
✅ Market reaction & investor takeaways
Key Financial Highlights
1. Profitability & Income Growth
- Net Profit (PAT): ₹4,765 crore (+22% YoY)
- Net Interest Income (NII): ₹10,227 crore (+22% YoY)
- Total Income: ₹16,697 crore (+21.6% YoY)
2. Loan & Customer Growth
- Assets Under Management (AUM): ₹4.41 lakh crore (+25% YoY)
- New Loans Booked: 13.49 million (+23% YoY)
- Customer Base: 106.51 million (+21% YoY)
3. Asset Quality Deterioration
- Gross NPA: 1.03% (vs. 0.86% in Q1 FY25)
- Net NPA: 0.50% (vs. 0.38% in Q1 FY25)
- Provisions: ₹2,120 crore (+26% YoY)
Segment-Wise Performance Breakdown
1. Core Business (Standalone)
- AUM: ₹3.25 lakh crore (+24% YoY)
- NII: ₹9,269 crore (+21% YoY)
- Gross NPA: 1.28% (worse than consolidated)
2. Subsidiaries
- Bajaj Housing Finance (BHFL):
- AUM: ₹1.20 lakh crore (+24% YoY)
- Net Profit: ₹583 crore (+21% YoY)
- Strong asset quality (GNPA: 0.30%)
- Bajaj Financial Securities (BFinsec):
- Net Profit: ₹41 crore (+37% YoY)
Management Commentary & Future Outlook
1. Leadership Stability
- Rajeev Jain (Vice Chairperson) confirmed he will remain in an operational role until March 2028 .
2. Credit Cost & NIM Guidance
- FY26 Credit Cost: Expected at 185–195 bps (elevated due to MSME & 2-wheeler loan stress) .
- Net Interest Margin (NIM): Likely flat with slight upside (5–10 bps) .
3. Growth Strategy
- FY26 AUM Growth Target: 23–24% .
- Focus Areas:
- Gold loans (adding ₹2,000 crore/quarter)
- SME & rural lending (despite stress signals) .
Market Reaction & Investor Takeaways
1. Stock Performance
- Pre-results: Fell 0.95% on July 24 .
- Post-results: Expected to trade volatile due to mixed signals (growth vs. NPAs).
2. Analyst Views
- Bullish: Strong AUM growth & customer addition .
- Cautious: Rising NPAs in unsecured/MSME loans .
3. Key Risks
⚠️ MSME Stress: 13 of 17 tracked sectors show slowdown .
⚠️ Consumer Leverage: Rising multi-loan customers .
Conclusion: Should You Invest?
Bajaj Finance delivered strong growth but faces asset quality challenges. Investors should:
✅ Monitor NPA trends in Q2 FY26.
✅ Watch for management’s execution on credit cost control.
✅ Consider long-term potential given leadership stability.
Disclaimer: Not investment advice. Consult a SEBI-registered advisor before investing.
What’s your view on Bajaj Finance’s Q1 results? Share in comments! 💬
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