Bajaj Finance Q1 Review - Strong PPoP Growth, But Higher Credit Cost Restricted Net Profit: ICICI Securities

ICICI Securities Report

Bajaj Finance Ltd. Q1 FY25 result has been largely in line except credit cost, which was higher-than-guided range. Credit cost increased to 2.12% (adjusted for management overlay utilisation stood at 1.99%) versus guidance of 1.75-1.85%.

While management highlighted that incremental delinquency and collection trend in July-24 is better than Apr-June-24 and credit cost in H2 FY25 should be materially lower than H1, meeting FY25 credit cost guidance will be the key thing to watch out.

Strong core operating performance as reflected in consolidated AUM growth of 7% QoQ and pre-provision operating profit growth of 8% QoQ, was largely driven by strong 8% QoQ revenue growth.

This resulted in Bajaj Finance sustaining industry-leading profitability with return on asset at 4.6% and return on equity at ~20% in Q1. Its resilient business model, built on strong customer acquisition engines and cross-sell, augurs well for maintaining leadership in the non banking financial company space.

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