Bajaj Finance share price hits record high after Budget 2025 announcement

Bajaj Finance Share Soars 5% to Reach Record High Post Budget 2025: Here’s Why

Posted on February 3, 2025 by Niftynews

Bajaj Finance shares surged by 5% after Budget 2025 announcement, reaching an all-time high of Rs 8,405.95. Read about the key factors driving this growth.


Introduction:

Bajaj Finance stock has surged 5.05% today, February 3, 2025, reaching an all-time high of Rs 8,405.95 per share. This rise follows a remarkable 15% increase over the past six trading days and is part of a broader trend that has seen the company outperform the market in 2025. Here’s a breakdown of the key factors driving Bajaj Finance’s record-high stock price.


Bajaj Finance Shares Surge After Budget 2025 Announcement

On January 30, 2025, Bajaj Finance stock crossed its previous record high of Rs 8,190, set in October 2023. Today, it surpassed that again, bolstered by positive market reactions to Budget 2025. In her speech, Finance Minister Nirmala Sitharaman announced an increase in the income tax exemption limit to Rs 12 lakh under the new tax regime. This measure is expected to boost disposable income, directly impacting consumption.

As of February 3, 2025, Bajaj Finance shares have surged 21% in 2025, outperforming the BSE Sensex, which has declined by 2% in the same period.


Budget 2025: A Boost to Consumption and Bajaj Finance

The government’s tax relief measures are expected to enhance disposable income, leading to higher consumption, especially for mid-income households. Analysts from CLSA suggest this will drive increased spending on durable goods, which could benefit retail credit lenders like Bajaj Finance. Retail loans make up a significant portion of the company’s portfolio, and higher consumption could translate into a stable credit growth environment.

Additionally, analysts at Elara Capital highlight that budgetary support for household balance sheets will help mitigate risks associated with unsecured lending, where Bajaj Finance has a strong presence.


Bajaj Finance’s Strong Loan Portfolio

Bajaj Finance’s diverse product suite is one of its key strengths. The company provides Consumer Durable Loans, Digital Product Loans, Lifestyle Product Loans, Retailer Finance, and more. Bajaj Finance’s loan book has reached Rs 3.98 trillion, with the mortgages segment contributing 30.7%, two-wheeler finance 4.8%, gold loans 1.8%, and car loans 2.8%.

The rise in consumption from the Budget’s tax relief measures is expected to further benefit Bajaj Finance’s retail lending business, helping drive loan growth and profitability.


Impact of Potential Interest Rate Cuts

In the wake of the Budget announcement, all eyes are on the Reserve Bank of India (RBI). Analysts, except for Yes Bank, are predicting a 25 basis-point rate cut, which could stimulate economic growth by lowering borrowing costs. If the RBI does reduce interest rates, it will likely benefit non-banking financial companies (NBFCs) like Bajaj Finance. Lower borrowing costs would enhance profit margins, especially for companies reliant on external funding for lending activities.


Strong Q3FY25 Results: A Testament to Bajaj Finance Growth

In Q3FY25, Bajaj Finance reported impressive results, with a 18% YoY increase in net profit, reaching Rs 4,308 crore. The company’s strong loan growth, driven by 12.06 million new loans, a 22% increase from last year, contributed significantly to this performance. Net interest income grew by 23% to Rs 9,382 crore, while assets under management (AUM) rose by 28% to Rs 3.98 trillion.

However, the company also faced challenges, as provisions for potential bad loans rose by 64% to Rs 2,043 crore, reflecting pressures from unsecured loan segments like credit cards and personal loans. The gross NPA ratio expanded to 1.12% from 0.95% last year, indicating potential risk from unsecured lending.


Market Capitalization and Future Outlook

As of now, Bajaj Finance market capitalization stands at a staggering Rs 5,17,172.68 crore, according to the BSE. Despite fluctuations in the broader market, Bajaj Finance shares remain resilient, and analysts are optimistic about the company’s future prospects, particularly with continued consumer demand and a potential rate cut from the RBI.


Conclusion:

Bajaj Finance stock price surge, driven by positive reactions to Budget 2025 and strong financial results, reflects the company’s resilience and growth potential. With its diversified loan portfolio and strong market presence, Bajaj Finance continues to be a key player in India’s financial services sector.

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