Bajaj Finance Limited has reported a strong financial performance for the second quarter of fiscal year 2026 (Q2 FY26), with significant growth in key metrics.

Financial Highlights

• Consolidated profit after tax increased by 23% year-over-year to ₹4,948 crore in Q2 FY26, up from ₹4,014 crore in Q2 FY25.
• Assets under management (AUM) grew by 24% to ₹462,261 crore as of September 30, 2025, compared to ₹373,924 crore a year earlier.
• New loans booked during the quarter rose by 26% to 12.17 million, up from 9.69 million in Q2 FY25.
• The company's customer franchise expanded by 20% year-over-year, reaching 110.64 million as of September 30, 2025.

Key Financial Metrics

• Net interest income increased by 22% to ₹10,785 crore in Q2 FY26.
• Net total income grew by 20% to ₹13,170 crore for the quarter.
• Pre-provisioning operating profit rose by 21% to ₹8,874 crore.

Asset Quality and Capital Adequacy

• Gross NPA ratio stood at 1.24% as of September 30, 2025, compared to 1.06% a year ago.
• Net NPA ratio was 0.60%, up from 0.46% in the previous year.
• Capital adequacy ratio (including Tier-II capital) remained strong at 21.23%, with Tier-I capital at 20.54%.

Segment Performance

The company reported growth across various business segments:

Management Commentary

Rajeev Jain, Vice Chairman & Managing Director, stated, "We delivered AUM growth of ₹20,811 crore to ₹462,261 crore, booked 12.17 MM new loans and added 4.13 MM new customers. Customer franchise stood at 110.64 MM."

Operational Highlights

• The company's geographic presence expanded to 4,039 locations.
• Active distribution points increased to 242,000 as of September 30, 2025.
• Deposits book grew by 5% year-over-year to ₹69,766 crore.

Subsidiary Performance

Bajaj Housing Finance Limited (BHFL) reported:

• 24% AUM growth to ₹126,749 crore
• 18% increase in profit after tax to ₹643 crore

Bajaj Financial Securities Limited (BFinsec) achieved:

• 40% growth in assets under finance to ₹7,597 crore
• 27% increase in profit after tax to ₹47 crore

Bajaj Finance continues to maintain a strong market position with robust growth across its diversified business segments, supported by a growing customer base and expanded distribution network.

Bajaj Finance , a leading non-banking financial company in India, saw its shares plummet over 7% following a downward revision in its assets under management (AUM) growth guidance and concerns over deteriorating asset quality. The company's latest financial results and outlook have sparked investor caution, despite reporting a significant increase in profits for the July-September quarter.

Revised Growth Outlook and Asset Quality

Bajaj Finance has adjusted its AUM growth guidance for the fiscal year, lowering it to 22-23% from the previous 24-25%. This revision comes alongside worrying trends in asset quality:

The rise in both gross and net non-performing assets (NPAs) indicates increasing stress in the company's loan portfolio.

Financial Performance

Despite the challenges, Bajaj Finance reported strong financial results for the July-September quarter:

Credit Costs and Business Outlook

The company expects credit costs to remain elevated, likely staying at the higher end of the 1.85%-1.95% guidance range. This projection suggests ongoing pressure on profitability due to asset quality concerns.

In a strategic move, Bajaj Finance has reduced its MSME (Micro, Small, and Medium Enterprises) business by 25%. The company projects modest growth of 10-12% in this segment by FY26, indicating a more cautious approach to this higher-risk lending category.

Management Commentary

Managing Director Rajeev Jain acknowledged that consumer leverage remains a concern for the company. However, he expressed optimism about the future, stating that Bajaj Finance expects a significant improvement in credit costs by FY27.

Market Implications

The sharp decline in Bajaj Finance's stock price reflects investor concerns about the company's near-term growth prospects and asset quality. The revised guidance and increased NPAs suggest that the company may face headwinds in maintaining its historically strong growth trajectory.

Investors and market analysts will likely keep a close eye on Bajaj Finance's ability to manage its asset quality while navigating the challenging economic environment. The company's performance in the coming quarters will be crucial in determining whether it can address these concerns and regain investor confidence.