Bajaj Finance Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kunal Shah - Citigroup Inc - Analyst : Congratulations for a good set of numbers. So firstly, maybe again, in terms of indicating 2.00 to 2.05 credit cost for 4Q, but when we look at maybe both in terms of the stage 2, as well as stage 3, there seems to be an increase any which way. So you alluded that at least in terms of the incremental trend, it's improving. But otherwise, any other metrics which is giving you that much of a confidence that we would have picked out in terms of the credit cost because you indicated that it will keep on trending lower? And any guidance that you would want to give for FY26?

Question: Kunal Shah - Citigroup Inc - Analyst : Okay. Sure. And secondly, in terms of -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:00PM, BJFN.NS - Q3 2025 Bajaj Finance Ltd Earnings Call

Question: Kunal Shah - Citigroup Inc - Analyst : Sure. And lastly, in terms of like last year, Q3, there was a senior management changes which were announced. Now, it's been almost a year. So how are we looking at it in terms of the management transitions? Any discussions out there, and what would be the roadmap? So now, LRS is also there. So maybe, in terms of the certainty on the management side would also help. So maybe if you want to comment on that part.

Question: Kunal Shah - Citigroup Inc - Analyst : By Q4. Okay. Yeah. Thank you.

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Yeah, thank you, sir. So two sets of questions. The first is, can you give some color on your debt management piece in the sense, what kind of OpEx does it incur given the fact that the system is under stress? How are costs per head panning out? Has that gone up significantly? What is the number of people involved? When does collection become unviable in terms of ticket size? Earlier, I remember you had flagged the [15,000] is the minimum ticket size below which it doesn't make sense. Something on that and how it's panned out through this time where delinquencies have gone up?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : To clarify this, Rajeev, are you saying that 48% of the collection is still physical, right?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Are you saying that 48% of the collection is still physical?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Okay. What would be the number of people involved since you said 4,000 were added?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Got it. Got it.

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Got it. The second piece I wanted to ask is on this Bharti Airtel partnership. Now, you mentioned that there are about 37, 38 crores customers that they enjoy. The question I wanted to know is what is the -- I mean, the non-Bajaj franchise, which can be lent to in that base because we also have a pretty hefty 10 crores customer base on which we have enough data? I'm sure the entire 37 crores of customers will not be backed by ability and willingness to pay. So what is the size of the opportunity in that partnership? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:00PM, BJFN.NS - Q3 2025 Bajaj Finance Ltd Earnings Call

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : Okay. And the products that you would start with are?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : And this last point, sir, you highlighted, I think, in the previous times when we had started slowing down the B2C personal loan business, that this pricing was not being followed at both ends of the spectrum, not just a small ticket one. Has that scenario improved in the high-ticket segment in the --

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : If they will be taking out, especially in the higher ticket part of the spectrum, is based on what?

Question: Antariksha Banerjee - ICICI Prudential AMC Ltd - Analyst : No, I'm saying if pricing is still not improved, then how is the higher ticket part of Rural B2C better than it was? What has changed?

Question: Piran Engineer - CLSA Ltd - Analyst : Yeah. Hi, team. Congrats on very strong numbers. Just firstly, in terms of just getting back to asset quality, can you share at least qualitatively if not quantitatively, what are the one [DPD] formation trends across portfolios? Has that stabilized? Has that improved? Is it better than -- or is it back to run rate levels?

Question: Piran Engineer - CLSA Ltd - Analyst : Can you -- just the main comps on business.

Question: Piran Engineer - CLSA Ltd - Analyst : Yeah. No, that's useful. So the main segment here among the larger ones really is Urban B2C where things are still slower because you mentioned that by default, it's a lower collection efficiency is also lower?

Question: Piran Engineer - CLSA Ltd - Analyst : Why?

Question: Piran Engineer - CLSA Ltd - Analyst : Got it. Got it. Fair enough. And just secondly, in terms of contagion to SME, you also marked it as amber in your PPT, but you're still growing at 40% in this business. So what really -- what's the disconnect here?

Question: Piran Engineer - CLSA Ltd - Analyst : Got it. Okay. That answers my question. Thank you and all the best.

Question: Viral Shah - IIFL Research - Analyst : Yeah, hi. Thank you. Rajeev, I have two to three questions, if I may. I'll go one by one. So one is on the used car business. You mentioned that, of course, the delinquencies are still relatively higher and that's an area where you are cautious. First of all, what is driving this -- is this the pricing on the usual vehicle front, if at all? Secondly, on this line item only, in the executive summary, it's mentioned that you are looking at accelerating this business. But on the other end, you are saying that you are cutting down the business over here. So just if you can help just reconcile that piece.

Question: Viral Shah - IIFL Research - Analyst : Good. And Rajeev, on the line item that you have as a car of INR11,100 odd crores, that's a new car segment, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:00PM, BJFN.NS - Q3 2025 Bajaj Finance Ltd Earnings Call

Question: Viral Shah - IIFL Research - Analyst : So the increase in delinquencies probably would be a function of the used car business, not as much as --

Question: Viral Shah - IIFL Research - Analyst : Fair enough. My second question is on the LAP piece.

Question: Viral Shah - IIFL Research - Analyst : Fair enough. Rajeev, the second question is on the loan against property piece. I know you have marked it green, and you flagged the pricing pressure. But if I look at the stage 1 and 2 over here, that sequentially seems to be on a declining trajectory. Are you seeing any, say, signs of asset quality stress, bounce rates, flow rates?

Question: Viral Shah - IIFL Research - Analyst : Okay. And so basically, the deterioration that we are seeing, of course, it could be either in BHFL or BFL, but it's more of the more chunkier pieces, not a more broad-based trend?

Question: Viral Shah - IIFL Research - Analyst : Okay. And Rajeev, on the gold loan front, if you can just give some color on our, I would say, not rapid growth because it's of a small base relatively, but the rapid expansion because this is coming from the context where few players have flagged some difficulties in terms of adopting the regulatory guidelines or the comfort which regulator wants in terms of doing this business. So what is the kind of driving this for you that it is working for you?

Question: Chintan Joshi - Autonomous Research - Analyst : Hi. Thank you for taking my questions. And thank you for the comprehensive comments on the asset quality. Can I focus on growth and NIM next? So on growth, you've indicated in previous calls that you've tightened credit standards in a number of areas you've grown businesses, but the growth rate is pretty strong at 28%. With the outlook that you see now, how do you think about the year-end growth for the kind of 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:00PM, BJFN.NS - Q3 2025 Bajaj Finance Ltd Earnings Call And then secondly, on NIMs, could you go a little bit more into the push and pull factors within the quarter? You highlighted stable cost of funds, but if you can give some color on kind of mix shifts within assets and liabilities. And also, how do we think about NIMs in the absence of a rate cut? How do we think about NIMs going forward? Thank you.

Question: Chintan Joshi - Autonomous Research - Analyst : Got it. If it goes to 2.05, then you could even accelerate your growth rate looking into the next year?

Question: Chintan Joshi - Autonomous Research - Analyst : Okay. And then on the question NIM?

Question: Chintan Joshi - Autonomous Research - Analyst : Okay. And on the asset side?

Question: Chintan Joshi - Autonomous Research - Analyst : To the pricing question in some areas generally, like, if you kind of think about both the mix and what the headline rates are, like, do you expect the yielder advances to be stable? Of course, talking in absence of rate cuts just to keep it simple.

Question: Chintan Joshi - Autonomous Research - Analyst : Okay, thank you.

Question: Shubhranshu Mishra - PhillipCapital (India) Private Limited - Analyst : Hi. Thanks for this opportunity. The first one is around the first question almost every investor ask is when do we convert to a bank? Is it today, two years from now, three years from now, seven years from now, 10 years from now? The definitive answer would be very helpful. Second is, Rajeev, your term ends March 25. How do we think of management transition after that? What would be your role post March 25? Second -- third is with the co-brand going off, there would be some degree of fee income pressure that we would see. What kind of fee income growth can we see from FY25 levels and FY26? And if you can speak of any new products and partnerships which are underway? Thanks.

Question: Shubhranshu Mishra - PhillipCapital (India) Private Limited - Analyst : Actually, I asked for the fee income growth in FY26. And any new products or partnerships which we can look at going forward?