First Cut | Bajaj Finance Q3 show makes it stand out in the troubled NBFC space

We are in the last phase of the September quarter earnings season, and the results announced by the BSE 500 companies so far have shown signs of a sharp recovery, as compared to the June quarter, when the economic activity in the country was compromised due to lockdown in various regions. From the BSE 500 list, 216 companies have announced their September quarter results so far. We excluded banking and financial companies.  Along with the index stocks we also analyse each sector quarterly earnings. (Data Source: ACE Equity)

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26 Aug, 2025 12:21

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Neha Dave
Moneycontrol Research

Bajaj Finance, one of the largest retail asset financing NBFCs in India, posted yet another year of solid 54 percent year-on-year (YoY) net profit growth led by robust loan book growth and controlled expenses.

There was no adverse impact of the liquidity crisis on loan growth. Assets book increased 41 percent YoY to Rs 109,930 crore aided by an extended festive period.

Loan growth was contributed mainly by consumer lending and mortgages. The growth in securities lending was in single digit. Robust growth in rural lending continued. The rural segment now constitutes 8 percent of the loan book, up from 1 percent in 2015.

Cost of funds increased for many NBFCs following the liquidity crisis, putting pressure on NIMs. Contrary to that, Bajaj Finance’s margins improved during the quarter leading to 46 percent YoY growth in net interest income (NII).

While operating expenses increased 31 percent YoY, the cost-to-income improved to 22.4 percent in Q3 FY19 due to operating leverage.

Asset quality deteriorated slightly with gross non-performing assets and net non-performing assets at 1.55 percent and 0.62 percent, respectively, as on December 31, 2018, although it still remains pristine. We await more details on the lender’s IL&FS exposure.

While the overall operating metric keeps getting better. We are most encouraged by the new customer acquisition of 2.51 million in this quarter, a growth of 39 percent YoY. Bajaj Finance now has total franchise of 30.05 million customers.

Overall, while there were macro headwinds in the form of tightened liquidity, rising interest rates and increasing competition that can compress margins, the micro business of Bajaj Finance continued to be very strong.Follow @nehadave01

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