Bajaj Finance's Q2 Profit Skyrockets 23%! AUM Crosses ₹4.6 Lakh Crore Amidst Strategic Shifts

Bajaj Finance announced robust financial results for the second quarter ended September 30, 2023. The company's consolidated net profit surged by 23% year-on-year, reaching ₹4,948 crore. Key performance indicators also showed strong growth, with net interest income rising 22% to ₹10,785 crore and total net income increasing by 20% to ₹13,170 crore. Assets Under Management (AUM), a critical metric for lending businesses, grew an impressive 24% to ₹4.62 lakh crore. The company also saw a significant uptake in new loan bookings, with 12.17 million loans disbursed, marking a 26% year-on-year increase. The customer base expanded by 20% to 110.64 million.

Despite the overall strong performance, Vice Chairman and Managing Director Rajeev Jain noted a moderation in MSME (Micro, Small, and Medium Enterprises) loan growth to 18%, attributing it to a cautious strategy aimed at business resilience. Following these risk management actions, the company has revised its AUM growth guidance for FY26 downwards to 20-23%, from the previously projected 22-25%. Bajaj Finance is also actively phasing out captive two- and three-wheeler loans, which have contributed significantly to losses, with plans to complete this transition by next year to improve balance sheet quality.

Impact This news has a significant impact on Bajaj Finance's stock, potentially leading to short-term volatility due to the revised guidance. However, the strong core growth and proactive risk management in the MSME segment and legacy loan portfolios could be viewed positively by investors for long-term stability. The NBFC sector's performance may also be influenced by these results and strategic shifts. Rating: 8/10

Difficult terms: Consolidated Net Profit: The total profit of a company including its subsidiaries. Net Interest Income (NII): The difference between the interest income a financial institution earns from its lending activities and the interest it pays out to its depositors. Assets Under Management (AUM): The total market value of investments that a financial institution manages on behalf of its clients. New Loans Booked: The number or value of loans disbursed by a company in a specific period. Customer Base: The total number of individuals or entities that use a company's services. Loan Losses and Provisions: Funds set aside by a lender to cover potential losses from loans that may default. Gross Non-Performing Assets (NPA): Loans for which the borrower has not made scheduled payments for a specified period (typically 90 days), without accounting for any provisions. Net Non-Performing Assets (NPA): Gross NPAs minus the provisions made by the lender for those bad loans. MSME Loans: Loans provided to Micro, Small, and Medium Enterprises, which are businesses of varying sizes that fall below certain thresholds. FY26 Guidance: A financial forecast or projection for the company's performance in the fiscal year 2026. Captive Loans: Loans provided by a company to customers for purchasing its own products (e.g., a two-wheeler manufacturer offering loans for its bikes).