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Where this quarter sits.
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What the record says.
Bajaj Finance reported a mixed Q1 FY25. AUM grew 31% YoY to INR 23,600 crore, with 11 million loans booked and 4.47 million new customers added. However, credit costs rose sharply to 2.12% of average AUM (net 1.99%), driven by muted collection efficiencies post-elections, leading to elevated Stage 2 assets. PAT grew only 14% due to a one-time deferred tax reversal in BHFL. Management maintained FY25 AUM growth guidance of 26-28% and credit cost guidance of 1.75-1.85%, with a marginal upward bias. NIM compressed 23 bps, partly from cost of funds. The key risk is whether elevated credit costs persist beyond Q2, which management expects to normalize by H2. Proactive pruning of risky segments is underway.
Colored figures show movement against the previous available record.
Guidance to track
- Management reiterated AUM growth guidance of 26-28% with an upward bias towards 28%, despite elevated credit costs.
- Management expects full-year credit cost between 1.75% and 1.85% of average AUM, but noted a marginal upward bias due to Q1 trends.
- Management expects cost of funds to peak by August or September and then stabilize, with potential decline if rate cuts occur.
- Bajaj Housing Finance has filed RHP with SEBI and stock exchanges for a potential IPO, subject to market conditions.
Risks flagged
- Management expects improvement in H2, but if collection efficiencies do not normalize, credit costs could remain above guidance.
- NIM compressed 23 bps in Q1, partly due to AUM mix shift. Further compression may occur if cost of funds remains elevated.
- Rural B2C portfolio grew only 5% in Q1, with elevated delinquencies. Management is pruning exposures, but recovery may take time.
- Large banks, especially PSUs, remain aggressive in personal loans, potentially pressuring market share and pricing.
Key quotes
- Between risk and growth, if you have to choose, we'll choose risk because longer term is more important than the shorter term.
- We are in a risk business. While I could argue with you that it's a transient frame, as a firm we are a risk-first business.
- We are pulling down exposures wherever we deem appropriate at this point in time based on the incoming data.
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