Explained: Why Bajaj Finance shares tumbled 6% despite strong Q1 results
For the June quarter, the company reported a 22% year-on-year jump in consolidated net profit to Rs 4,765 crore, driven by strong loan disbursals and a growing customer base. Net interest income (NII) also rose 22% YoY to Rs 10,227 crore, while total income grew 21% to Rs 12,610 crore. Profit before tax came in at Rs 6,368 crore, up 21% from the previous year.Loan growth remained robust, with 13.49 million new loans booked during the quarter—an increase of 23% from Q1FY25. The customer franchise expanded 21% YoY to 10.6 crore, with 4.69 million new additions in the quarter.Assets under management (AUM) rose 25% year-on-year to Rs 4.41 lakh crore, up by Rs 24,789 crore sequentially. Pre-provisioning operating profit stood at Rs 8,487 crore, up 22% YoY.However, concerns emerged on the asset quality front. Loan losses and provisions rose 26% YoY to Rs 2,120 crore, and the annualized credit cost for the quarter stood at 2.02% of average assets under finance. Gross non-performing assets (GNPA) rose to 1.03%, up from 0.86% a year ago, while net NPA increased to 0.50% from 0.38%. The provision coverage ratio (PCR) on Stage 3 assets stood at 52%.Despite the uptick in credit costs, the company's capital adequacy remains solid. The capital to risk-weighted assets ratio (CRAR) stood at 21.96%, with Tier-I capital at 21.19%.While Bajaj Finance continues to demonstrate strong fundamentals in terms of growth and profitability, the market is now closely watching the rising stress on asset quality and elevated provisions. These are likely to remain key monitorables in the coming quarters.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends
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