AUM
₹290,664 crore
+33% YoY
Assets under management crossed ₹290,000 crore, driven by strong disbursements across segments.
BAJFINANCE
Financial Services
18 Oct 2023
Bajaj Finance Ltd — Q2 FY24
Bajaj Finance reported a strong Q2 FY24 with PAT of ₹3,551 crore, up 28% YoY, driven by robust AUM growth of 33% to ₹290,664 crore and disciplined cost management.
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2-Minute Summary
✦ AI-Generated from Full Transcript
Bajaj Finance reported a strong Q2 FY24 with PAT of ₹3,551 crore, up 28% YoY, driven by robust AUM growth of 33% to ₹290,664 crore and disciplined cost management. The company added 3.58 million new customers, taking the total franchise to nearly 77 million. Asset quality remained healthy with net NPA at 31 bps. Management highlighted proactive portfolio actions, cutting 8-14% of business in urban/rural B2C segments to mitigate rising industry leverage. NIM compression of 14 bps sequentially was noted, with another 25-30 bps expected, offset by operating leverage. New initiatives like non-Bajaj Auto two-wheelers, car financing, and microfinance pilot are gaining traction. The board approved a ₹10,000 crore capital raise. Key risk: elevated competitive intensity and regulatory scrutiny on unsecured lending could pressure growth and margins.
बजाज फाइनेंस ने दूसरी तिमाही में 3,551 करोड़ रुपये का मुनाफा कमाया, जो पिछले साल से 28% ज्यादा है। इसकी वजह कर्ज देने में 33% की बढ़ोतरी और खर्चों पर काबू रहना है। कंपनी ने 35.8 लाख नए ग्राहक जोड़े, अब कुल ग्राहक 7.7 करोड़ के करीब हैं। बुरे कर्ज का स्तर सिर्फ 0.31% रहा, जो सेहतमंद है। प्रबंधन ने शहरी और गांव के कुछ कर्ज 8-14% घटाए हैं ताकि जोखिम कम हो। ब्याज दरों में कमी से आय पर दबाव है, लेकिन कंपनी इसे दूसरे खर्चों में बचत से पूरा करेगी। नए काम जैसे दोपहिया, कार लोन और छोटे कर्ज की शुरुआत अच्छी चल रही है। बोर्ड ने 10,000 करोड़ रुपये जुटाने की मंजूरी दी है। मुख्य जोखिम: बढ़ती प्रतिस्पर्धा और सख्त नियमों से मुनाफा घट सकता है।
Key Numbers
New Customers Added
3.58 million
+7.42 million H1
Customer franchise reached nearly 77 million; on track to add 13-14 million new customers in FY24.
Net NPA
31 bps
flat YoY
Net non-performing assets remained stable at 31 basis points, reflecting strong asset quality.
Cost of Funds
7.67%
+6 bps QoQ
Cost of funds rose marginally sequentially; management expects further increase due to replacement of low-cost borrowings.
What Changed vs Last Quarter
NEW
ROA to sustain at 5% on exit basis
Despite NIM compression, the company expects to sustain a return on assets of 5% on an exit basis for FY24, supported by operating leverage.
NEW
Microfinance pilot to expand to 100 locations by March 2024
The microfinance pilot launched in 12 villages will scale to 100 locations by March 2024, with a target of 300 villages by March 2025.
NEW
Capital raise of ₹10,000 crore via QIP and preferential allotment
Board approved raising ₹10,000 crore, comprising ₹8,800 crore through QIP and ₹1,200 crore preferential allotment to Bajaj Finserv, to support growth.
UPDATED
NIM compression of 25-30 bps expected for full year
Management guided for another 25-30 basis points of NIM compression over the remainder of FY24, driven by rising cost of funds and competitive pressure on yields.
DROPPED
AUM growth of 29-31% for FY24
Management raised full-year AUM growth guidance from 27-29% to 29-31%, driven by strong Q1 momentum.
DROPPED
Credit cost guidance of 155-165 bps for FY24
Full-year credit cost expected to be range-bound between 155-165 bps, including 6-8 bps from model redevelopment.
DROPPED
New car financing to reach INR 200-250 crore per month by March 2024
New car financing business, launched in 80 cities, is expected to achieve monthly disbursements of INR 200-250 crore by exit of FY24.
NEW RISK
Regulatory scrutiny on unsecured lending growth
Analyst raised concern about RBI's focus on unsecured loan growth; management acknowledged moderation in value but noted count growth remains elevated.
NEW RISK
Potential risk weight increase on unsecured loans
Analyst asked about impact of possible risk weight hikes; management said they have levers to manage profitability but did not quantify impact.
RISK GONE
Rural B2C portfolio stress
Rural B2C portfolio flagged as yellow due to elevated risk; business has been cut by INR 200-250 crore per month.
RISK GONE
Potential impact of economic slowdown on asset quality
Analyst raised concern about unsecured loan growth; management acknowledged but expressed confidence in underwriting.
Management Guidance
NIM compression of 25-30 bps expected for full year
Management guided for another 25-30 basis points of NIM compression over the remainder of FY24, driven by rising cost of funds and competitive pressure on yields.
Management guidance marginsROA to sustain at 5% on exit basis
Despite NIM compression, the company expects to sustain a return on assets of 5% on an exit basis for FY24, supported by operating leverage.
Management guidance marginsMicrofinance pilot to expand to 100 locations by March 2024
The microfinance pilot launched in 12 villages will scale to 100 locations by March 2024, with a target of 300 villages by March 2025.
Management guidance expansionCapital raise of ₹10,000 crore via QIP and preferential allotment
Board approved raising ₹10,000 crore, comprising ₹8,800 crore through QIP and ₹1,200 crore preferential allotment to Bajaj Finserv, to support growth.
Management guidance otherKey Risks
Rising industry leverage in small-ticket loans
Management flagged that customers with multiple small-ticket loans (<₹50,000) show higher imprudence and default rates, prompting portfolio cuts of 8-14%.
high · management_commentaryNIM compression from rising cost of funds
Cost of funds is expected to rise as low-cost borrowings mature and are replaced at higher rates, compressing NIM by 25-30 bps for the full year.
medium · management_commentaryRegulatory scrutiny on unsecured lending growth
Analyst raised concern about RBI's focus on unsecured loan growth; management acknowledged moderation in value but noted count growth remains elevated.
medium · analyst_questionPotential risk weight increase on unsecured loans
Analyst asked about impact of possible risk weight hikes; management said they have levers to manage profitability but did not quantify impact.
medium · analyst_questionNotable Quotes
We've cut between 8%-14% of the business in urban and rural, 14% in rural and 8% in urban, as a preventive measure, to those who have more smaller ticket loans, while they may be short-term in nature, represents imprudence.
If there were ever butterflies in the stomach on this business, that was March 2020 till March 2022. Because we thought work from home is the new future. What would happen to this portfolio? This portfolio, even between March 2020 and March 2022, we did not see a single instance of default.
We are very capital prudent and very... Lastly, I think, you know, since you talked capital raise, we've always raised capital and consistently demonstrated our ability to effectively deploy it effectively and deliver medium-term ROE goals.
Frequently Asked Questions
What was Bajaj Finance's revenue in Q2 FY24?
Bajaj Finance reported revenue of — in Q2 FY24, representing a — change compared to the same quarter last year.
What guidance did Bajaj Finance management give for FY25?
NIM compression of 25-30 bps expected for full year: Management guided for another 25-30 basis points of NIM compression over the remainder of FY24, driven by rising cost of funds and competitive pressure on yields. ROA to sustain at 5% on exit basis: Despite NIM compression, the company expects to sustain a return on assets of 5% on an exit basis for FY24, supported by operating leverage. Microfinance pilot to expand to 100 locations by March 2024: The microfinance pilot launched in 12 villages will scale to 100 locations by March 2024, with a target of 300 villages by March 2025. Capital raise of ₹10,000 crore via QIP and preferential allotment: Board approved raising ₹10,000 crore, comprising ₹8,800 crore through QIP and ₹1,200 crore preferential allotment to Bajaj Finserv, to support growth.
What are the key risks for Bajaj Finance in FY25?
Key risks include Rising industry leverage in small-ticket loans — Management flagged that customers with multiple small-ticket loans (<₹50,000) show higher imprudence and default rates, prompting portfolio cuts of 8-14%.; NIM compression from rising cost of funds — Cost of funds is expected to rise as low-cost borrowings mature and are replaced at higher rates, compressing NIM by 25-30 bps for the full year.; Regulatory scrutiny on unsecured lending growth — Analyst raised concern about RBI's focus on unsecured loan growth; management acknowledged moderation in value but noted count growth remains elevated.; Potential risk weight increase on unsecured loans — Analyst asked about impact of possible risk weight hikes; management said they have levers to manage profitability but did not quantify impact..
Did Bajaj Finance meet its previous quarter's guidance?
Of 1 tracked promise, management 1 met, 0 close, 0 missed.
Where can I read the full Bajaj Finance Q2 FY24 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.