Shares of Bajaj Finance are higher by over 3% on December 11, a day after its investor meet where the company shared an upbeat guidance on customer franchise and talked about the Long-Range Strategy and AI pivot with analysts.
Rajeev Jain, MD, Bajaj Finance said the NBFC aims to become BFL 3.0 – powered by fintech and AI - in its pivot over the next 4-5 years.
"BFL is currently implementing 29 GenAI use cases across 25 work streams, which will deliver an annual cost save of Rs 150 crore in FY26 alone. But more importantly, GenAI adoption has helped us build a much clearer strategic roadmap," Bajaj Finance said in its presentation to investors.
Bajaj Finance - FY29 Guidance: Key Highlights
Bajaj Finance plans to ramp up the customer franchise to 13-14 crore by FY28 versus 9.2 crore in H1FY25. The management projected a significant jump in customer franchise in FY29 to nearly 20 crore, indicating at a possible acquisition down the road.
The cross-sell franchise is seen rising to 11.5-12.5 crore by FY29 versus 5.8 crore in H1FY25.
By FY29, the share of total credit could rise to 3.2-3.5% versus 2.11% in H1FY25.
Retail credit could reach 3.8-4.2% by FY29 versus 2.67% in H1FY25. Bajaj Finance is also projecting a RoE of 20-22% in FY29 versus 19.4% as of H1FY25.
Bajaj Finance said the MSME segment is the next big growth engine for the NBFC, and in the 3.0 version, the company will seek to be among the top three players in the gold loan, MFI and two-wheeler segment.
Green financing through solar as well as EV projects will be the new products that the lender will focus on, said the NBFC. It will also aim to deploy conversational AI in sales, in order to ramp up conversion rates by three-folds.
Mega Trends
The presentation identified three new megatrends, namely, Green Finance, Multi Cloud, Zero Trust in its Long-Range Strategy for FY25-29, and added AI as one of them during this period.
Bajaj Finance said it will now be financing solar and EV products to retail and MSME customers in Q4FY25, targeting Rs 2,000 crore of green finance in FY26.
The NBFC will develop security framework for customers that operate on the principle of 'trust but always verify', and will be investing in deep and critical security polices over next 12-18
months to deliver comprehensive zero trust initiatives by FY26.
In order to make applications cloud agnostic and boost their resilience, Bajaj Finance said it will implement a 'multi cloud orchestration strategy' to the top 40 of its 94 applications over the next 18 months. It envisions to be a 'omnipresent' NBFC with physical, app, web, social, rewards and AI presence over next four years.
The management said it is committed to making every business of the company amongst top five in their line of business, and become among the top 20 most-profitable companies in India.
Bajaj Finance also said it will become an early adopter and invest in emerging technologies to seek growth and lower costs.
"BFL will be A FINAI company with AI enabled technology architecture, which integrates AI across all its processes to significantly improve customer engagement, grow revenue, reduce
Opex, reduce credit costs, enhance productivity and strengthen controllership," the presentation said.
Share Price Action
While the shares of Bajaj Finance seem to be making a comeback in recent weeks, for the year till date, it is lower by 2.5%. The NBFC has a market capitalisation of Rs 4.40 lakh crore.
Street View
Motilal Oswal in its latest note on the NBFC said on December 11 that the company is 'well-poised' to achieve its FY25 targets, including Rs 4 lakh crore in AUM. MOSL added that the valuations are attractive at 3.7x P/BV and 20x FY26E P/E, but it does not see significant upside till the asset quality challenges in B2C loan book are addressed. It also said the NBFC needs to be make efforts to improve proportion of secured loans in its loan mix, and maintained a 'Neutral' with target of Rs 7,500.
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