Bajaj Finance shares surged nearly 9 percent on Friday to hit a fresh 52-week high after the non-banking financial company reported a 28 percent year-on-year rise in consolidated profit after tax (PAT) for the June quarter of FY27, driven by improved loan quality.

The results beat analyst estimates across key metrics and maintaining stable margins despite higher funding costs.

The stock climbed 8.68 percent to Rs 1,145, its 52-week high, on the NSE.

Total assets under management (AUM) grew 24 percent year-on-year to Rs 5,46,944 crore. The company added nearly Rs 36,969 crore in new loans during the quarter. Its customer franchise expanded with the addition of 5.10 million customers, taking the total to 124.43 million.

According to Mayank Jain, Market Analyst at Share.Market by PhonePe, one of the key positives in the quarter was the improvement in asset quality.

Gross non-performing assets (GNPA) declined to 0.96 percent from 1.03 percent a year ago, while net NPAs improved to 0.39 percent. Total provisions for bad loans stood at Rs 1,993 crore, including an additional Rs 296 crore kept as a precautionary provision.

Excluding the additional provision, core credit losses fell 14 percent from a year ago, indicating improved repayment trends. Return on equity (ROE) also improved to 20.4 percent.

Business growth, however, remained mixed across segments. The company's gold loan portfolio more than doubled to Rs 21,152 crore, supported by branch expansion across the country.

In contrast, the two-wheeler and three-wheeler financing portfolio declined 64 percent, while MSME lending grew 2 percent amid higher defaults in the segment.

Operating expenses increased due to investments in artificial intelligence and branch expansion. The management expects operating efficiency to improve in the coming quarters.

On the technical charts, the stock witnessed a breakout with strong trading volumes and moved above its key moving averages to trade around Rs 1,131 per share, Jain added.

He further added the company's long-term growth outlook remains positive, advising the existing investors to continue holding the stock, while fresh investors may consider waiting for a price correction instead of buying after the sharp rally.

The company reported a 28 percent increase in consolidated net profit to Rs 6,081 crore for the quarter. Net total income rose 22 percent to Rs 15,224 crore from Rs 12,460 crore in the corresponding period last year.

CLSA said Bajaj Finance's calculated net slippage ratio fell 90 basis points year-on-year to 1.2 percent. UBS said the lender's assets under management climbed at its fastest pace in three quarters, driven by strong growth in consumer sales finance and gold loans, reported Reuters.