- Bajaj Finance shares fell 5.55% after RBI proposed halting NBFC revolving credit facilities
- Profit booking post quarterly results contributed to the stock's decline, says analyst Ravi Singh
- RBI draft restricts NBFCs from offering revolving credit, impacting Bajaj’s MSME and retail loans
Bajaj Finance shares came under pressure on Friday, with the stock falling as much as 5.55% to an intraday low of Rs 1,086 per share after a new Reserve Bank of India (RBI) draft paper proposed halting revolving credit facilities by non-banking financial companies (NBFCs).
According to IIFL, revolving credit products account for around 15% of Bajaj Finance's assets under management, the highest exposure among peers. This makes the company more susceptible to the impact of RBI's proposed norms restricting non-bank lenders to offering only term loans, the brokerage said.
Additionally, according to Ravi Singh, Chief Research Officer at Master Capital Services, the decline is also due to profit booking after the stock's recent rally.
"Bajaj Finance has witnessed some profit booking following its quarterly results after a strong run-up in the stock," Singh said.
From a technical standpoint, he expects Rs 1,060 to act as the immediate and crucial support level, while Rs 950 remains the next key support if selling pressure intensifies.
On the upside, Singh said Rs 1,130 is likely to act as a strong resistance, adding that "a decisive move above this level could pave the way for fresh momentum."
The Key Trigger
As outlined by Morgan Stanley, the central bank's draft proposes restricting NBFCs from offering revolving credit products, reserving this capability solely for entities explicitly authorised to issue credit cards. The note highlights that flexi and overdraft loans operating within the corporate, MSME, and unsecured personal loan segments are likely to face a significant impact.
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Under the proposed definition, revolving credit is distinguished from term loans—which require a pre-determined amortisation schedule—meaning that once disbursed, a sanctioned limit cannot be restored or replenished even after the principal amount is partially or fully repaid.
Bajaj Finance share price is under pressure in Friday trade.
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This regulatory tightening directly targets segments where Bajaj Finance has heavy exposure. The lender's MSME loan portfolio, which includes working capital loans that often utilise flexi-limits, currently stands at $5.4 billion.
Furthermore, the company's massive retail credit infrastructure could see ripple effects. Bajaj Finance currently has 97.71 million EMI cards in circulation, which offer revolving limits of up to Rs 3 lakh and repayment tenures of up to 60 months.
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Bajaj Finance Q1FY27 Highlights
Despite Friday's decline, Bajaj Finance reported a robust set of June quarter numbers that exceeded Street estimates.
Consolidated net profit rose 27.4% year-on-year to Rs 5,986 crore, ahead of the Bloomberg estimate of Rs 5,846 crore, while net interest income (NII) increased 23% to Rs 12,571 crore, also topping expectations.
Operating profit came in at Rs 10,137 crore, marginally above estimates of Rs 10,031 crore. Asset quality improved, with gross NPA easing to 0.96% from 1.03%, while net NPA stood at 0.39%, better than the Street estimate of 0.46%.
Assets under management (AUM) grew 24% year-on-year to Rs 5.46 lakh crore as of June-end, supported by strong growth in the gold loan and commercial vehicle & tractor financing portfolios.
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