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Time of India
30-07-2025
- Business
- Time of India
Is Bajaj Finance's decline a sign of looming crisis in India's NBFC sector?
Live Events Agencies (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: A precipitate post-earnings decline in the stock of Bajaj Finance , India's biggest, pure-play non-bank lender by market value, has underscored rising stress in hitherto bankable sectors served by such companies, with analysts looking to the festive season for most borrowers to generate the necessary cash flows that would boost both NBFC asset quality and collection efficiencies."We are seeing pockets of stress emerging in sectors like micro finance, personal loans, cards and also micro-SME loans," said Anand Dama, head, BFSI Research at Emkay Global Financial Services "It is still not led by macro indicators. We expect this stress to continue in the second and third quarters at least, and hope that it does not deteriorate with the macro slowdown, which is difficult to predict as of now."While a marked improvement in banking system liquidity since last autumn has theoretically lowered the cost of NBFC financing and eased the pressure on the liabilities side of their balance sheets, the industry faces fresh challenges from the asset side now.A sizable section of microfinance loans has turned into non-performing assets-both at banks and NBFCs-and collection efficiencies have been under the lens due to the suspect repayment ability of a section of challenges are being felt even by top NBFCs, such as Bajaj Finance, which helped millions of Indians step on to the consumption ladder for the first time over the past decade. In the post-results analyst call last week, Bajaj Finance MD Rajeev Jain said that 13 of the 17 industries the company tracks in the MSME sector are showing signs of a slowdown, while three others are showing signs of contraction."So, it's virtually a perfect storm in a way. (Our) MSME portfolio is (about) ₹50,000 crore, which is entirely unsecured. In that, principally, (loans to) doctors is ₹15,000 crore. Even there, we are seeing pressure. So this segment did not trouble us even in Covid actually. This segment is also suddenly troubled. We ran that for 15 years. It has always been 99% current kind of portfolio," Jain Bajaj Finance stock has fallen more than 8% in a week, with about 6% coming on the day after the earnings on added that within MSMEs, the problem is with the business loans, and Bajaj Finance is "going hammer and tongs" to ensure that loan repayments are at pre-Covid levels for MSME as well non-MSME loans. Even for L&T Finance, another large NBFC, asset quality deteriorated with gross stage 3 loans due past 90 days at 3.31% in June 2025 from 3.14% a year ago. As a result, impairment costs increased 39% year on year to ₹542 crore from ₹390 crore a year Sudipta Roy described it as a challenging analysts caution that the troubles in the MSME sector are limited to unsecured loans."If you see bank loans to the sector which are largely secured, they are performing well. So it is not a sector phenomenon right are companies with ₹10 crore to ₹15 crore turnover and business cycles go up and down. The festive season is crucial. If consumption recovers then we could see stress abate or things will become worse," said Bunty Chawla, analyst at IDBI Capital. Analysts said the second half of the fiscal remains crucial as macroeconomic conditions are heavily dependent on a good monsoon and festive spending to improve both demand for loans as well as asset quality.
Mint
28-07-2025
- Business
- Mint
Banks, NBFCs continue to battle rising stress in unsecured loans in Q1
Mumbai: Indian banks continued to experience stress in their unsecured loan books in the first quarter of the current financial year, with select lenders and non-banking financial companies (NBFCs) flagging higher bad debt in new segments such as credit for small businesses and retail commercial vehicles. Notably, the pockets of unsecured stress were seen in various segments such as microfinance, retail commercial vehicle, MSME (micro, small, and medium enterprises) and personal loans and credit cards, according to bankers' post-earnings analyst calls in recent days. Add to that the cyclical impact of higher farm loan slippages, and most lenders saw elevated provisions for potential loan losses and credit cost weighing on their balance sheet during the three months through June. 'Lenders are still cautious amid the asset quality stress in unsecured segment, which is reflected in slow loan growth in this segment. This continues to tighten liquidity for the borrowers and their ability to refinance the existing loans, which in turn is leading to asset quality stress for lenders. The big challenge for the lenders is assessment of income," said Anil Gupta, senior vice president, Icra. The country's largest private sector lenders such as HDFC Bank, ICICI Bank and Axis Bank highlighted a seasonal jump in agriculture slippages. Axis Bank was also an outlier in terms of bad-loan provisions, which surged due to a shift in its classification methodology for certain loan segments such as retail cash credit and one-time settlement of stressed loans. While Axis Bank said that the shift in methodology was to align the bank's stress recognition as per industry best practices, the country's largest consumer finance lender Bajaj Finance reported a substantial rise in delinquencies in MSME and business banking loans for the first time, besides the auto finance portfolio. 'MSME business has shown some strain since February so it's coming a little too suddenly. We've taken a whole host of actions to prune business. It's likely that both these businesses will grow a lot more slowly in the current year," Rajeev Jain, vice-chairman, Bajaj Finance, said in a post-earnings call on Friday. 'Credit costs were principally elevated in two-wheeler and three-wheeler business, which is a winding down business. That's a good news. The captive book has given us a lot of trouble, or continues to give us trouble," Jain added. However Shriram Finance was an outlier, seeing a sequential drop in credit cost to 1.9% in the first quarter from 2.4% in the preceding three months. 'The questions from investors have been that their numbers always come with a lag and hence we are not confident," said Suresh Ganapathy, managing director of Macquarie Research. "Plus, the guidance on margins and consequent delivery of the same has been a disappointment, as per investors." Loan jolt Banks such as IDFC First Bank, Kotak Mahindra Bank and Bandhan Bank reported weaker profitability on the back of a rise in microfinance slippages. The management of these banks said that while stress in the sector is expected to remain elevated in the current quarter, it seems to have peaked. As such, lenders highlighted early signs of easing and said that they expect the asset quality of the portfolio to start improving Q3 (October-December) onwards. 'The MFI book is a typically 24-30-month kind of book and therefore, it obviously runs off pretty fast. Currently, the new disbursements we are doing is in about the same level of run-offs. So the book will kind of stabilise and start climbing again once disbursements pick up," Kotak Bank's managing director and chief executive officer Ashok Vaswani said on 26 July. Kotak Bank and HDB Financial, the NBFC arm of HDFC Bank, also flagged a rise in commercial vehicle slippages, which the bank attributed to overall macro-economic slowdown, especially in the logistics and infrastructure sectors, and delayed payments from central and state governments. Some large banks such as HDFC Bank and Bank of Baroda also made additional prudent provisions in order to beef up their buffers. HDFC Bank and ICICI Bank said that, outside of the agriculture loan book, they are bracing for the possibility of asset quality worsening through the rest of the year. 'The credit cost continues to be benign, and some point in time, it will revert to the mean. What that means is a moot point, and how long it takes is also a moot point, but as of now, it continues to be benign and healthy," HDFC Bank's chief financial officer Srinivasan Vaidyanathan said in a post-Q1 analyst call. ICICI Bank's finance chief Anindya Banerjee said while the current sort of credit behaviour and asset quality is extremely benign, the bank will 'probably see some increase going forward". 'Credit costs today are negligible. So, they may go up slightly," he said in the analyst call.
Business Standard
22-07-2025
- Business
- Business Standard
Barometers edge higher in early trade; Nifty above 25,100 level
The domestic equity indices traded with minor gains in early trade. The Nifty traded above the 25,100 level. Media, metal and oil & gas shares advanced while pharma, auto and realty shares declined. At 09:30 IST, the barometer index, the S&P BSE Sensex, rose 175.33 points or 0.21% to 82,365.07. The Nifty 50 index rose 39.15 points or 0.15% to 25,123.85. In the broader market, the S&P BSE Mid-Cap index rose 0.04% and the S&P BSE Small-Cap index gained 0.41%. The market breadth was negative. On the BSE, 1,892 shares rose and 2,264 shares fell. A total of 171 shares were unchanged. The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, fell 1.66% to 11.07. Foreign portfolio investors (FPIs) sold shares worth Rs 1,681.23 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 3,578.43 crore in the Indian equity market on 21 July 2025, provisional data showed. Stocks in Spotlight: Bajaj Finance rose 0.30%. The companys managing director (MD), Anup Kumar Saha has resigned due to personal reasons. Rajeev Jain will assume the leadership as vice chairman and MD until March 2028, ensuring smooth succession and business continuity. Dhanlaxmi Bank added 1.51% after the banks standalone net profit surged 252.2% to Rs 12.18 crore on 20.5% jump in total income to Rs 407.06 crore in Q1 FY26 over Q1 FY25. Numbers to Track: The yield on India's 10-year benchmark federal paper rose 0.06% to 6.306 from the previous close of 6.300. In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 85.2500 compared with its close of 86.3100 during the previous trading session. MCX Gold futures for 5 August 2025 settlement shed 0.02% to Rs 99,305. The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.06% to 97.91. The United States 10-year bond yield shed 0.21% to 4.370. In the commodities market, Brent crude for September 2025 settlement shed 59 cents, or 0.85% to $68.62 a barrel. Global Markets: Asian stocks traded mixed on Tuesday as investors turned cautious ahead of the looming August 1 deadline for potential US trade tariffs. Japanese stocks, in particular, saw sharp swings after Prime Minister Shigeru Ishibas ruling coalition lost its majority in the upper house. Wall Street offered little direction, with US indices closing mostly flat overnight despite hitting fresh intraday records. The spotlight this week remains firmly on corporate earnings, with Tesla and Alphabet set to report on Wednesday. By the close in New York, the Dow slipped 0.04%, the S&P 500 inched up 0.14%, and the Nasdaq rose 0.38%.
Business Standard
22-07-2025
- Business
- Business Standard
Stock Alert: PNB Housing Finance, Oberoi Realty, Bajaj Finance, CIE Automotive
Securities in F&O Ban: Bandhan Bank and RBL Bank shares are banned from F&O trading on 22 July 2025. Upcoming Results: United Breweries, Aurionpro Solutions, Blue Jet Healthcare, Colgate Palmolive (India), CreditAccess Grameen, Cyient DLM, Dalmia Bharat, Dixon Technologies (India), Goodluck India, Huhtamaki India, Ideaforge Technology, IRFC, JSW Infra, Kajaria Ceramics, KEI Industries, Kirloskar Pneumatic Company, Mahindra & Mahindra Financial Services, Mahanagar Gas, One 97 Communications(Paytm), Shyam Metalics and Energy, SML Isuzu, VST Industries, Zee Entertainment will declare their result later today. Stocks to Watch: PNB Housing Finances consolidated net profit jumped 23.3% to Rs 533.50 crore on 13.6% increase in total income to Rs 2081.87 crore in Q1 FY26 over Q1 FY25. Oberoi Realty reported a 27.9% decline in consolidated net profit to Rs 421.25 crore on 29.7% fall in net sales to Rs 987.55 crore in Q1 June 2025 over Q1 June 2024. Bajaj Finances managing director (MD), Anup Kumar Saha has resigned due to personal reasons. Rajeev Jain will assume the leadership as vice chairman and MD until March 2028, ensuring smooth succession and business continuity. Dhanlaxmi Banks standalone net profit surged 252.2% to Rs 12.18 crore on 20.5% jump in total income to Rs 407.06 crore in Q1 FY26 over Q1 FY25. DCM Shrirams consolidated net profit jumped 13% to Rs 113.38 crore on 13.4% increase in net sales to Rs 3248.63 crore in Q1 FY26 over Q1 FY25.
Mint
21-07-2025
- Business
- Mint
Bajaj Finance managing director Saha quits three months after appointment
Mumbai: Bajaj Finance Ltd managing director Anup Saha has quit citing 'personal reasons', just three months after his appointment, making longtime chief Rajeev Jain once again take over the reins at the non-bank financier. Saha, who had joined Bajaj Finance in 2017, was among the three names mentioned as contenders for the top job at private lender Indusind Bank, according to media reports. The bank has been looking for a chief executive since its former head quit following a debacle around accounting practices for its derivative portfolio. The other two names, reportedly submitted by Indusind Bank to the Reserve Bank of India (RBI) for approval, include soon-to-retire Axis Bank deputy managing director Rajiv Anand and Rahul Shukla, who is 'taking personal time off' from his role at HDFC Bank. Mint recently reported that while the regulator usually seeks names six months in advance as part of the approval process, given the circumstances, it could expedite its vetting. If appointed to head Indusind Bank, it would not be Saha's first role at a commercial bank. Prior to joining Bajaj Finance, Saha spent 14 years at ICICI Bank. He has led various businesses including credit cards, mortgages, auto loans and structured finance. Saha holds an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Saha did not respond to a call and a text message seeking comment. In March, while announcing Saha's elevation as the managing director, Bajaj Finance had said that he 'ensures that Bajaj Finance remains at the forefront of the industry, consistently achieving shared success and benefiting all stakeholders'. In a regulatory filing on Monday, Bajaj Finance said, 'Consequent to the resignation Anup Kumar Saha and in the interest of continuity of management, the board, pursuant to the recommendation of nomination and remuneration committee of the company and the applicable provisions of the Companies Act, 2013, has, in addition to Rajeev Jain's existing powers and roles as executive vice-chairman of the company, vested him with the powers, roles and responsibilities of management of the company and re-designated him as vice-chairman and managing director of the company for the remainder of his term i.e. till 31 March 2028.' Jain, who joined Bajaj Finance as chief executive officer in 2007, went on to become the managing director in 2015. Before joining Bajaj, he worked with GE, American Express and the American International Group. He is considered to be the force behind transforming Bajaj Finance from a small auto finance business to a financial conglomerate. In March, the lender announced that he would become the vice-chairman in the capacity of an executive director.
