Bajaj Finance Limited

Bajaj Finance Ltd.

Market share : Personal Loans Market share stood at 7% in the personal loan segment.
This was consistent with pre-COVID levels and remained steady in FY2024 ​(bajaj jun24) held a 51-52% market share in consumer durable loans

Growth Guidance for Bajaj Finance (as of March 2024 and June 2024):

1. Asset Under Management (AUM) Growth:

   • In FY2024, Bajaj Finance reported a 34% AUM growth, increasing its total AUM to ₹330,600 crores.
   • For FY2025, the company provided guidance of 26-28% growth in AUM, supported by newly launched secured businesses such as loans against property, car financing, and tractor finance.

2. Profitability:

   • For FY2024, the PAT (Profit After Tax) grew by 21%, and the company reported an ROE of 20.5%.
   • For FY2025, Bajaj Finance expects a moderation in PAT growth, with profits becoming more rear-ended due to the initial NIM (Net Interest Margin) compression.

3. Customer Acquisition:

   • Bajaj Finance added 14.5 million new customers in FY2024 and projects adding between 12 to 14 million customers in FY2025.

4. New Product Launches:

   • The company continues to diversify its product mix, focusing more on secured lending products like home loans and vehicle financing.
   • Notably, BHFL, a 100% subsidiary of Bajaj Finance, is also planning an IPO (its complete now).

Risks:

1. Rural B2C Loan Performance:

   • The company’s rural B2C loan portfolio has shown signs of stress, with a significant reduction in growth from 25% to 6% by March 2024.
   • Bajaj Finance has slowed down rural B2C growth until it can better manage the risks in this sector, which may constrain growth potential.

2. NIM Compression:

   • There was a 21-basis point compression in NIM in Q4FY2024 due to rising cost of funds and a pivot towards secured lending products. This NIM compression is expected to stabilize by Q3 of FY2025.

3. Regulatory Challenges:

   • Regulatory restrictions impacted two key products, eCOM and Insta EMI Card, but the company has addressed the issues and requested a review from the RBI.
   • There are ongoing concerns regarding regulatory compliance, and the company remains committed to adhering to the RBI’s guidelines.

4. Credit Costs:

   • Credit costs for Bajaj Finance are expected to remain in the 1.75-1.85% range, with the company taking a cautious stance due to muted collection efficiencies in certain segments like rural lending.