Kennedy, 36, was stopped in the third round against Babic, who had won all his previous fights by knockout inside the first two rounds.
Garda Kennedy coped well with Babic early on as the pair traded blows.
He landed a number of blows with ease, something which Babic's previous opponents didn't get a chance to do.
However, a left hook from 'The Savage' in the second round sent Kennedy to the canvas.
Kennedy got to his feet and kept in the fight but the referee stopped the fight in the third round.
Kennedy still holds an impressive professional record of 13-1-2, with the losses coming in his last two fights against Babic and Devin Vargas.
Ireland's top-ranked heavyweight has a huge support at home and he thanked his fans for their well-wishes after the bout.
A lot of well wishes toni that I will get back to in time @AlenBabic11 was the better man. I can't thank everyone enough for all d support on which was ultimately a bad night at the office. Home to my little man tomo and have a good look at things but the tank is empty I think.
— Niall Kennedy Boxer (@niallbaskennedy) October 4, 2020
