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.

Bajaj Finance , one of India's leading non-banking financial companies, has reported a robust performance for the second quarter of fiscal year 2026. The company's consolidated profit after tax surged by 23% year-over-year to ₹4,948.00 crore, demonstrating strong financial health amid a growing customer base and expanding assets under management (AUM).

Key Financial Highlights

• Consolidated AUM grew by 24% to ₹462,261.00 crore as of September 30, 2025, compared to ₹373,924.00 crore in the same period last year.
• Net interest income increased by 22% to ₹10,785.00 crore in Q2 FY26.
• Net total income rose by 20% to ₹13,170.00 crore.
• Pre-provisioning operating profit saw a 21% increase, reaching ₹8,874.00 crore.
• The company maintained a healthy return on assets (ROA) of 4.5% and return on equity (ROE) of 19.1%.

Customer Franchise and New Loans

Bajaj Finance continued its strong momentum in customer acquisition and loan disbursements:

• The customer franchise expanded to 110.64 million as of September 30, 2025, a 20% increase from 92.09 million a year ago.
• New loans booked during the quarter stood at 12.17 million, up 26% from 9.69 million in Q2 FY25.
• The company added 4.13 million new customers in Q2 FY26.

Asset Quality and Capital Adequacy

The company reported the following asset quality metrics:

• 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.
• Provisioning coverage ratio on stage 3 assets remained strong at 52%.
• Capital adequacy ratio (including Tier-II capital) was robust at 21.23%, with Tier-I capital at 20.54%.

Subsidiary Performance

Bajaj Housing Finance Ltd (BHFL), a subsidiary of Bajaj Finance, also reported strong growth:

• BHFL's AUM grew by 24% to ₹126,749.00 crore.
• Profit after tax increased by 18% to ₹643.00 crore in Q2 FY26.
• BHFL maintained excellent asset quality with a Gross NPA of 0.26% and Net NPA of 0.12%.

Strategic Developments

The company highlighted several strategic initiatives:

• Implementation of FINAI (Financial AI) across business lines, expected to yield cost and productivity benefits in the next 12-18 months.
• Identification of 123 high-impact AI use cases, with 80 planned to go live by February 2026.
• Deployment of AI-powered voice and text bots for various services, including loan disbursements and customer service resolutions.

Festive Season Performance

Bajaj Finance reported strong performance during the festive season (Navratri to Diwali):

• Disbursed 6.3 million consumer loans, marking a 27% growth in volume and 29% in value compared to the previous year.
• Added 2.3 million new customers, with approximately 52% being new-to-credit customers.
• Observed a premiumization trend, particularly in TV financing, with loans for 40-inch and above screens accounting for 71% of total TV financing.

Management Commentary

Rajeev Jain, Vice Chairman and Managing Director of Bajaj Finance, stated, "We have delivered a good quarter on volume, AUM, Opex, profitability, ROA, and ROE. While credit costs remained elevated, our strategic focus on AI implementation and customer-centric innovations positions us well for sustained growth."

Bajaj Finance's strong Q2 FY26 results reflect its resilient business model and strategic initiatives in technology and customer acquisition. The company's focus on AI implementation and expanding its digital capabilities is expected to drive further efficiencies and growth in the coming quarters.