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Chart Beat: It is back to action for Bajaj Finance in Q1FY25
Summary
- Bajaj Finance saw a record 4.47 million new customer additions in Q1FY25 and new loan bookings improved to 10% following the RBI's lift on loan restrictions. Despite this operational success, the stock has lagged. Are better days ahead for Bajaj Finance?
Bajaj Finance Ltd reported a significant uptick in its June quarter (Q1FY25) performance following the Reserve Bank of India's (RBI) decision on 2 May to lift restrictions on the company’s 'eCOM' and 'Insta EMI Card' loan sanctioning and disbursal operations. This regulatory change also permitted the issuance of new EMI cards, providing a fresh boost to the non-banking financial company's business.
In Q1FY25, Bajaj Finance added 4.47 million new customers, marking a healthy 16% year-on-year increase and a multi-quarter high. This compares favourably to the 3.23 million new customers added in the March quarter.
“The trend of customer additions in Q1FY25 was significantly stronger than in previous years, indicating that both e-commerce and Insta EMI Card customer acquisitions have regained strong momentum," pointed out a note from Motilal Oswal Financial Services.
The company’s overall customer base expanded by 21% year-on-year during the quarter. Additionally, new loan bookings grew by 10%, higher than a 4% increase in the previous quarter. Bajaj Finance also reported a strong 31% year-on-year growth in assets under management (AUM), reaching approximately ₹3.5 trillion as of 30 June. Liquidity levels remained solid, with a net liquidity surplus of about ₹16,200 crore as of the same date.
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So far in 2024, Bajaj Finance’s shares have declined by over 2%, lagging the Nifty Financial Services index, which has risen by about 11% during the same period. Investors will now focus on the company's margin performance in the upcoming June quarter results. “We will watch out for trends in credit costs that has risen in past two quarters and dragged earnings growth," said analysts at Jefferies India.
