Bajaj Finance Q2 net profit soars 88% on-year, beats estimates

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Bajaj Finance Q2 earnings

Bajaj Finance, one of the largest NBFCs in India, reported its September quarter results on Thursday post-market close. The results were above analysts' estimates. The share closed marginally higher at Rs 7404 per share. In 2022, the share has gained only 2%.

Key highlights from Bajaj Finance's Quarterly results:

Let us look at Bajaj Finance's Q2FY23 numbers in detail:

Net profit surges: Bajaj Finance reported a 88% year-on-year jump in consolidated net profit to Rs 2,781 crore for July-Sep 22. In the same quarter last year, the company reported a Rs 1,481 crore profit. Analysts had earlier estimated a consolidated net profit of about Rs 2,638 crore for the period between July and Sep. The company said the current profit is its highest ever.

Net interest income increase: NBFC's primary business is to borrow money from different sources and lend the same borrowed money at a higher rate. The income it generates from this difference is known as net interest income. It is one of the crucial parameters as it helps us find out how much a company is earning from its core operations. The consolidated net Interest Income (NII) for Q2FY23 increased by 31% to Rs 7,001 crore as against Rs 5,337 crore in Q2FY22.

Asset Under Management (AUM): Consolidated AUM rose to Rs 2.18 lakh crore from Rs 1.67 lakh crore, an increase of 31% year-on-year. Sequentially, the AUM increased from Rs 2.04 lakh crore. Core AUM growth was Rs 14,348 crore in Q2FY23.

Asset Quality improves: The consolidated gross NPA ratio for Q2FY23 stood at 1.17%. It was 1.25% for the period between Apr and June and 2.45% for the year-ago period. The net NPA ratio came down at 0.44%, an improvement of 7 basis points sequentially and 56 bps year-on-year.

Loan Losses and provisions: For the September quarter, loan losses and provisions reported were Rs 734 crore as against Rs 1,300 crore in the year-ago period. The company holds a macro-economic and management overlay of Rs 1,000 crore at the end of the September quarter.

Business Growth: All the businesses under Bajaj Finance did well in Q2FY23. The consumer B2C business increased by 31% year-on-year. Rural B2B and B2C businesses grew by 33% and 34%, respectively. The commercial lending business was up by 36%, while auto finance (Consumer B2B) contracted 5% year-on-year.

Increase in the customer base: Customer franchises stood at 62.91 million at the end of the June quarter compared to 52.80 million as of 30 September 2021, a growth of 19%. During the quarter, Bajaj Finance reported an increase in customers of 2.61 million. 

Other Updates: New loans booked during the June quarter were 6.76 million as against 6.33 million last year in the same period, a growth of 7%. The capital adequacy ratio (including Tier-II capital) as of 30 September 2022 was 25.13%. The Tier-I capital was 23.14%.

Bajaj Finance Q2 earnings: Long-term guidance 

Subsidiaries Update

  • Bajaj Housing Finance Limited: The AUM grew by 42% to Rs 62,931 crore as of 30 September 2022 from Rs 44,429 crore in Q2FY22. Net Interest Income for Q2FY23 increased by 49% to Rs 590 crore from Rs 396 crore in Q2FY22. Profit After Tax increased by 84% to Rs 306 crore.

Bajaj Financial Securities Limited: BFinsec acquired approximately 78,700 retail and HNI customers in Q1FY23. Customer franchises stood at approximately 446K at the end of the September quarter. Total Income for Q2FY23 was Rs 47 crore as against Rs 32 crore in Q2FY22. BFinsec generated a profit after tax of Rs 1 crore in Q2FY23.