Bajaj Finance Limited (BFL), a leading non-banking financial company (NBFC) in India, has grown into one of the country’s most diversified financial services providers. As of April 05, 2025, BFL serves millions of customers across urban and rural markets with a wide range of lending and financial products. This article examines Bajaj Finance’s business model, its financial performance in Q3 FY25 (October-December 2024), and provides insights into promoter details and the shareholding pattern.
Bajaj Finance Business Model
Bajaj Finance operates a business model centered on lending and financial services, targeting retail, small and medium enterprises (SMEs), and commercial customers. Established in 1987 as Bajaj Auto Finance, it has evolved from a vehicle financing entity into a diversified NBFC with a strong focus on consumer finance and digital innovation.
Key Components of the Business Model
- Consumer Lending
BFL offers personal loans, consumer durable loans, home loans (via Bajaj Housing Finance), and EMI financing for retail purchases. Its EMI card, with over 50 million issued by Q3 FY25, drives significant sales in consumer goods. - SME and Commercial Financing
The company provides business loans, working capital finance, and loans against property to SMEs and commercial clients, leveraging its risk assessment capabilities to tap underserved markets. - Digital Transformation
BFL’s app and web platforms facilitate seamless loan applications, payments, and customer service, serving 35.8 million digital users by December 2024. AI-driven cost savings, such as Rs 150 crore from automated calls, enhance efficiency. - Deposits and Investments
BFL accepts public and corporate deposits, offering competitive rates to fund its lending operations. It also cross-sells insurance and mutual funds through partnerships. - Subsidiaries and Ecosystem
Bajaj Housing Finance Ltd. (BHFL), a listed subsidiary, focuses on housing loans, while Bajaj Financial Securities Ltd. caters to broking services, creating a broad financial services ecosystem.
Challenges in the Model
BFL’s aggressive lending growth increases exposure to credit risk, particularly in unsecured loans. Rising funding costs and regulatory scrutiny on NBFCs could pressure margins. Its reliance on consumer spending also makes it sensitive to economic downturns.
Q3 FY25 Earnings
Bajaj Finance released its Q3 FY25 (October-December 2024) financial results on January 28, 2025, reporting robust growth in assets under management (AUM) and customer base, though profitability faced headwinds from higher credit costs. Below is a detailed analysis of the performance.
Financial Highlights
- Net Profit: Consolidated net profit grew 13% year-on-year (YoY) to Rs 4,114 crore from Rs 3,639 crore in Q3 FY24. Sequentially, it rose 2% from Rs 4,014 crore in Q2 FY25.
- Revenue from Operations: Revenue increased 23% YoY to Rs 11,996 crore from Rs 9,735 crore, driven by strong loan disbursements.
- AUM: Assets under management surged 26% YoY to Rs 3,54,237 crore from Rs 2,81,219 crore, with new loans booked up 20% YoY to 9.86 million.
- Net Interest Income (NII): NII rose 22% YoY to Rs 6,675 crore from Rs 5,471 crore, though net interest margin (NIM) compressed to 9.8% from 10.1% due to higher funding costs.
- Provisions: Loan loss provisions jumped 40% YoY to Rs 1,450 crore from Rs 1,036 crore, reflecting stress in unsecured loan segments.
Segment-Wise Performance
- Consumer Finance: Grew 25% YoY, driven by festive season demand for durable loans and EMI financing.
- SME Lending: Expanded 20% YoY, supported by small business recovery and digital disbursements.
- Deposits: Deposit book increased 19% YoY to Rs 66,123 crore, aiding funding diversification.
Key Factors Behind the Q3 Performance
- AUM Growth: A 26% YoY rise in AUM reflects strong customer acquisition (101.82 million total customers, up 4.7 million in Q3).
- Credit Costs: Higher provisions due to delinquencies in personal loans tempered profit growth.
- Margin Compression: Rising cost of funds (up 20 bps YoY) offset some gains from loan expansion.
Nine-Month FY25 Overview (April-December 2024)
For the first nine months of FY25, BFL reported:
- Revenue of Rs 34,678 crore, up 25% YoY.
- Net profit of Rs 12,178 crore, up 18% YoY.
- AUM growth of 26% YoY, reaching Rs 3,54,237 crore by December 2024.
Promoter Details and Shareholding Pattern
Promoter Information
Bajaj Finance is controlled by the Bajaj family, led by Rahul Bajaj (Chairman Emeritus until his passing in 2022) and now overseen by Rajiv Bajaj and Sanjiv Bajaj (Chairman and Managing Director of Bajaj Finserv Ltd., the parent entity). The promoter group operates through Bajaj Finserv Ltd., which holds a majority stake in BFL.
Shareholding Pattern (as of December 31, 2024)
Based on the latest regulatory filings:
- Promoter Holding: 54.70%, unchanged from September 2024, with no significant pledged shares, reflecting strong family control.
- Foreign Institutional Investors (FIIs): 20.15%, down from 20.68% as of September 2024, indicating minor profit-taking.
- Domestic Institutional Investors (DIIs): 15.23%, up from 14.89%, with mutual funds holding 9.12% of the DII stake.
- Public and Others: 9.92%, slightly up from 9.73% as of September 2024.
The stable promoter stake underscores the Bajaj family’s long-term commitment, while high institutional ownership reflects investor confidence in BFL’s growth story.
Strategic Updates and Outlook
- Digital Push: BFL’s digital platforms served 35.8 million users by Q3 FY25, with AI saving Rs 150 crore annually in operational costs.
- Subsidiary Performance: Bajaj Housing Finance reported a 25.4% YoY PAT rise to Rs 548 crore in Q3 FY25, boosting group earnings.
- Customer Growth: Added 4.7 million customers in Q3, reaching a franchise of 101.82 million.
BFL’s outlook depends on sustaining AUM growth, managing credit costs, and adapting to regulatory changes, though rising interest rates and economic slowdowns pose risks.
Bajaj Finance’s business model, rooted in diversified lending and digital innovation, has fueled its rise as a leading NBFC, though it faces challenges from credit risk and margin pressures. Q3 FY25 earnings show a 13% profit increase, driven by a 26% AUM surge, tempered by higher provisions. The promoter group’s 54.70% stake in the shareholding pattern signals stability, complemented by strong institutional backing. Stakeholders must assess BFL’s ability to balance growth with risk management in a dynamic financial landscape.
Disclaimer
The information in this article is based on publicly available data as of April 05, 2025, sourced from regulatory filings, company announcements, and credible reports. It is intended for informational purposes only and does not constitute financial advice, investment recommendations, or an endorsement of Bajaj Finance Limited. Readers should conduct their own research and consult financial professionals before making investment decisions. The author and publisher are not liable for any errors, omissions, or outcomes resulting from the use of this information.
