Bajaj Finance’s ₹4,546 Crore Q4 Profit: Why Investors Are Confident Despite RBI’s Notice
Bajaj Finance Limited, one of India’s leading non-banking financial companies (NBFCs), has once again captured the attention of investors with its robust Q4 FY25 performance, reporting a consolidated net profit of ₹4,546 crore, a 19% year-on-year (YoY) increase from ₹3,825 crore in Q4 FY24. Despite a recent Reserve Bank of India (RBI) notice highlighting cybersecurity concerns, the company’s stock has shown resilience, climbing 24% year-to-date as of May 2025. This article explores the factors driving Bajaj Finance’s strong financial results, the implications of the RBI’s notice, and why investors remain optimistic about the NBFC’s future.
Stellar Q4 FY25 Performance
Bajaj Finance’s Q4 FY25 results, announced on April 29, 2025, underscore its position as a powerhouse in India’s financial sector. The company reported a 23.7% YoY revenue growth to ₹18,469 crore, driven by a 22% increase in net interest income (NII) to ₹9,807 crore from ₹8,013 crore in the same quarter last year. Assets under management (AUM) grew by an impressive 26% YoY to ₹4.16 lakh crore, fueled by strong demand across diverse lending segments such as gold loans (up 81%), car loans (up 68%), and urban B2C loans (up 33%). The company also booked 10.7 million new loans, a 36% YoY surge, reflecting its ability to capture India’s growing consumer credit market.
The customer franchise crossed a significant milestone, reaching 10.18 crore by March 2025, with 0.47 crore new customers added in Q4 alone. This growth highlights Bajaj Finance’s expansive reach and its ability to cater to India’s burgeoning middle class. Asset quality remained stable, with gross non-performing assets (GNPA) at 0.96% and net non-performing assets (NNPA) at 0.44%, demonstrating effective risk management despite higher loan loss provisions of ₹2,329 crore, up from ₹1,310 crore in Q4 FY24.
For the full year FY25, Bajaj Finance reported a 16.1% increase in net profit to ₹16,779 crore and a 26.8% rise in revenue to ₹69,725 crore. These numbers reflect the company’s consistent growth trajectory, supported by its diversified portfolio spanning personal loans, home loans, vehicle financing, SME loans, and wealth management services.
Shareholder-Friendly Initiatives
Bajaj Finance’s board announced several measures to reward shareholders, further bolstering investor confidence. These include:
- 1:2 Stock Split: Each equity share with a face value of ₹2 will be split into two shares of ₹1, effective June 16, 2025, to enhance liquidity and make the stock more accessible to retail investors.
- 4:1 Bonus Issue: Shareholders will receive four additional shares for every share held, also effective June 16, 2025, signaling the company’s confidence in its long-term growth.
- Dividend Payouts: A total dividend of ₹56 per share for FY25, comprising a special interim dividend of ₹12 (payable by May 26, 2025) and a final dividend of ₹44 (subject to shareholder approval, payable by July 28, 2025). The special dividend was funded by exceptional gains from the IPO listing of its subsidiary, Bajaj Housing Finance, in September 2024.
These initiatives have been well-received, with the stock jumping 4% on June 10, 2025, following the announcement of the record date for the stock split and bonus issue. The moves underscore Bajaj Finance’s commitment to creating shareholder value and maintaining market competitiveness.
The RBI Notice: A Speed Bump, Not a Roadblock
In early 2025, the RBI issued a notice to Bajaj Finance, flagging cybersecurity lapses and urging the company to strengthen its digital infrastructure. While this led to a temporary 2% dip in the stock price, the market’s reaction was short-lived, with shares recovering swiftly. Investors appear to view the notice as a minor hiccup rather than a systemic issue, for several reasons:
- Proactive Response: Bajaj Finance has a track record of addressing regulatory concerns promptly. The company has already outlined plans to enhance its cybersecurity framework, aligning with RBI guidelines. This proactive approach mitigates the risk of prolonged regulatory scrutiny.
- Strong Fundamentals: The RBI notice does not directly impact Bajaj Finance’s core operations or financial health. Its robust AUM growth, stable asset quality, and diversified revenue streams provide a solid foundation that overshadows regulatory concerns.
- Market Leadership: As India’s largest NBFC by market capitalization (₹6,05,000 crore as of June 2025), Bajaj Finance’s scale and brand equity instill confidence. Its ability to consistently outperform peers like Jio Financial, Cholamandalam Investment & Finance, and Shriram Finance reinforces its market dominance.
Analysts also note that the RBI’s focus on cybersecurity is part of a broader push to strengthen India’s financial sector, and Bajaj Finance is well-positioned to adapt given its tech-driven business model. The company’s investment in digital platforms, such as the EMI card and Flexi loans, has been a key driver of its growth, and further enhancements are expected to align with regulatory expectations.
Why Investors Remain Bullish
Despite the RBI notice and a 5% stock price drop post-Q4 results due to higher-than-expected loan loss provisions and a slight reduction in FY26 guidance, investor confidence in Bajaj Finance remains strong. Several factors contribute to this optimism:
- Robust Growth Metrics: The 26% AUM growth and 36% surge in new loans reflect Bajaj Finance’s ability to capitalize on India’s rising credit demand. Its focus on high-growth segments like gold and car loans positions it to benefit from economic recovery and consumer spending trends.
- Leadership Transition: The appointment of Anup Saha as Managing Director has been viewed positively. Saha’s experience within the company and his focus on sustainable growth have reassured investors, despite initial market concerns about the leadership change.
- Analyst Support: Of the 38 analysts covering Bajaj Finance, 25 maintain a “Buy” rating, with price targets ranging from ₹9,200 to ₹10,800. Firms like HSBC and Jefferies cite the company’s potential for 25% EPS growth through FY28, driven by strong fundamentals and market expansion.
- Resilient Stock Performance: Despite short-term volatility, Bajaj Finance’s stock has delivered a 29% year-to-date return as of April 8, 2025, outperforming the broader finance and banking sector. Its 113% return over the past five years underscores its long-term wealth creation potential.
- India’s Economic Tailwinds: Bajaj Finance’s growth is closely tied to India’s expanding middle class and increasing financial inclusion. With the RBI cutting repo rates twice in three months, the credit environment is expected to remain favorable, supporting loan growth.
Challenges to Watch
While the outlook is positive, investors should remain mindful of potential risks:
- Rising Credit Costs: Loan loss provisions rose significantly in Q4, reflecting higher defaults in certain segments. While asset quality remains stable, any deterioration could pressure profitability.
- Competitive Pressures: The NBFC sector is becoming increasingly competitive, with players like Jio Financial and Bajaj Housing Finance vying for market share. This could impact net interest margins (NIMs) in the long term.
- Regulatory Oversight: The RBI’s focus on cybersecurity and compliance could lead to additional costs or restrictions, though Bajaj Finance’s proactive measures mitigate this risk.
Conclusion
Bajaj Finance’s Q4 FY25 performance, with a ₹4,546 crore net profit and 26% AUM growth, reaffirms its status as a leader in India’s NBFC sector. The company’s shareholder-friendly initiatives, including a stock split, bonus issue, and hefty dividends, have further solidified investor trust. While the RBI’s cybersecurity notice briefly rattled the market, Bajaj Finance’s swift response, strong fundamentals, and alignment with India’s economic growth story have kept investors bullish. With a market cap of ₹6,05,000 crore and a robust growth outlook, Bajaj Finance remains a compelling choice for long-term investors, provided it navigates competitive and regulatory challenges effectively.
Last Updated on: Monday, June 16, 2025 12:26 pm by Charan Sai Reddy | Published by: Charan Sai Reddy on Monday, June 16, 2025 12:26 pm | News Categories: Business, Finance
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