Bajaj Finance hits record high on strong loan growth, asset quality

Shares of Bajaj Finance jumped as much as 9.3% to an all-time high on Friday after analysts said accelerating loan growth in the first quarter alongside improving credit quality reinforced confidence in the non-bank lender’s earnings outlook.

The stock closed 8.3% higher at 1,141.20 rupees and was the top gainer on India’s benchmark Nifty 50 index, which ended up 0.27%.

On Thursday, Bajaj Finance reported a 28% rise in first-quarter profit after tax, while net interest income grew 23%, beating analyst estimates across key metrics and maintaining stable margins despite higher funding costs.

At least six brokerages raised their target prices after the results, with analysts citing a decline in bad loans despite a challenging credit environment.

Bajaj Finance beats profit view on higher loan growth, asset quality boost

CLSA said Bajaj Finance’s calculated net slippage ratio fell 90 basis points year-on-year to 1.2%, while Nomura noted that gross stage-2 assets - loans showing elevated credit risk but not yet impaired - dropped to their lowest level since the COVID-19 pandemic.

UBS said the lender’s assets under management climbed at its fastest pace in three quarters, driven by strong growth in consumer sales finance and gold loans.