The Bajaj FinServ share price is down nearly 6% after the company announced its Q4 numbers late last evening. The street is worried about the slowdown in credit growth, impact of new surrender regulations in Life Insurance Business, change in accounting for long term contracts in General Insurance industry and significant stock market volatility.
External challenges for Bajaj FinServ
The company’s Q4 results indicate overall slowdown in credit growth and that is no doubt impacting sentiment and continues to be an overhang on the operating environment. The stock market volatility is also seen as a potentially worrying factor as this could affect income and investment trends and also the resulting profitability of the business.
Bajaj Finserv: Higher NPAs in lending business
The other key area of of concern for Bajaj Finserv is the higher NPAs in the lending business. According to the Q4 results, the Q4 losses for Bajaj Finance has remained elevated. There was an additional provision of Rs 359 crore on account of credit loss that is expected. This is likely due to the model redevelopment in Q4. Net NPAs (non-performing assets) for both Bajaj Finance and Bajaj Housing Finance came in higher. Especially for Bajaj Finance, even the Stage 2 & 3 assets showed elevated levels in Q4. The annualised loan loss when compared to average AUM expanded significantly for Bajaj Finance.
Bajaj FinServ Q4FY25 performance
The company’s Q4FY25 profit after tax is up 14% to YoY to Rs 2,417 crore Vs Rs 2,119 crore in the same quarter last fiscal. The profit after tax for the insurance subsidiaries account for the unrealised Mark-to-market gain/loss on investments but the gain/loss on Investments classified as FVTOCI has been excluded. The insurance subsidiaries have chosen to hold a part of the equity securities portfolio as Fair Value Through Profit and Loss (FVTPL) and the balance as Fair Value Through Other Comprehensive Income (FVTOCI). This may cause temporary volatility in financial results due to unrealised mark to market (MTM) movements on the FVTPL portfolio. Further, the realised profit on FVTOCI equity portfolio is not routed through Profit and Loss Account.
Bajaj FinServ share performance
The Bajaj Finserv share price is down 6% intra-day today and over the last 5 days, the shares have been trading 7% lower. However in 2025, so far the shares are up 23%. This when compared with the Nifty’s performance in the same period, shows distinct outperformance. The Benchmark is up 2.5% so far in 2025. If we track the 1-year performance, the shares are up0%.