Bajaj Finance Adjusts Growth Outlook Amid Rising NPAs and SME Sector Challenges
Bajaj Finance has adjusted its growth outlook for FY26 to 22-23% due to increased stress in SME and two/three-wheeler segments. The company reported higher gross and net NPA ratios of 1.24% and 0.60% respectively as of September 30, 2025. In response, Bajaj Finance reduced unsecured MSME volumes by 25% and expects credit costs to be at the upper end of 1.85-1.95%. Despite challenges, new loans booked grew by 24% to 25.66 million, and AUM increased by 24% to ₹4.62 lakh crore. The company is implementing a 'BFL 3.0 – A FINAI Company' strategy to embed AI across processes and enhance growth.
*this image is generated using AI for illustrative purposes only.
Bajaj Finance , one of India's leading non-banking financial companies (NBFCs), has revised its growth projections for the upcoming fiscal year, citing increased stress in the Small and Medium Enterprise (SME) and captive two-wheeler and three-wheeler segments. This adjustment comes as the company navigates through a challenging economic landscape marked by rising non-performing assets (NPAs) and sector-specific pressures.
Key Financial Metrics
The company reported an increase in its gross and net NPA ratios as of September 30, 2025:
| Metric | September 30, 2025 | September 30, 2024 |
|---|---|---|
| Gross NPA | 1.24% | 1.06% |
| Net NPA | 0.60% | 0.46% |
This rise in NPAs indicates growing stress in Bajaj Finance's loan portfolio, particularly in the SME sector.
Revised Growth Outlook
In response to these challenges, Bajaj Finance has taken several strategic steps:
- Reduced unsecured MSME volumes by 25%
- Adjusted growth expectations for FY26 to 22-23%, down from previous projections
- Anticipates credit costs to be at the upper end of the 1.85-1.95% range
The company now expects growth to stabilize at 10-12% in FY26, reflecting a more conservative outlook given the current market conditions.
Business Performance
Despite the headwinds, Bajaj Finance has shown resilience in certain areas:
- New loans booked during H1FY26 grew by 24% to 25.66 million
- Assets under Management (AUM) increased by 24% to ₹4.62 lakh crore
Market Performance and Analyst Views
The stock has demonstrated strong performance over the past year:
- 49% returns over one year
- Significantly outperformed broader market indices (Nifty: 7%, Sensex: 6%)
However, brokerage opinions are mixed:
- Motilal Oswal maintains a 'Neutral' rating with a target price of ₹1,160
- Axis Securities retains a 'Buy' rating, setting a target of ₹1,200
Strategic Initiatives
Bajaj Finance is embarking on a transformation journey dubbed 'BFL 3.0 – A FINAI Company'. This strategy aims to:
- Embed AI across all processes
- Accelerate growth and enhance customer engagement
- Improve productivity and reduce costs
The company expects to implement these FINAI capabilities over the next 12-18 months, potentially creating a sustainable growth cycle for the next 7-8 years.
Conclusion
While Bajaj Finance faces near-term challenges, particularly in the SME and two/three-wheeler segments, its strategic initiatives and strong market position suggest a cautious outlook. The company's ability to navigate through these headwinds while implementing its FINAI strategy will be crucial in maintaining its growth trajectory and market leadership in the coming years.
Investors and market watchers will be keenly observing how Bajaj Finance balances its growth ambitions with prudent risk management in this evolving economic landscape.
Historical Stock Returns for Bajaj Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.03% | -2.78% | -2.30% | +12.02% | +54.26% | +131.46% |
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