Bajaj Finance Ltd. reported a solid rise in net profit and interest income in the second quarter of the current financial year, even as asset quality soured.
Consolidated profit rose 22% year-on-year to Rs 4,875 crore in the July-September quarter, as per results announced on Monday, compared to an estimate of Rs 4,969 crore.
Net interest income also jumped 22% to Rs 10,785 crore, against a forecast of Rs 10,955 crore. Pre-provisioning operating profit increased by 21%.
Asset quality worsened, with the share of gross non-performing loans rising to 1.24% from 1.03% in the previous quarter. Net NPA came in at 0.60% versus 0.50% in the June quarter. Loan losses and provisions increased by 19%.
"Consumer leverage remains an area of concern. The company continues to take ongoing actions to reduce the contribution of customers with multiple loans. The vintage credit performance, as a result, are significantly better except for MSME," Bajaj Finance said in a statement.
Credit cost remained elevated in captive 2 and 3-wheeler and MSME businesses. The company reduced 25% of its unsecured MSME volumes and thus AUM growth for MSME lending will be 10-12% in FY26, the statement added.
The total assets under management rose 24% year-on-year to Rs 462,261 crore.
The company witnessed strong momentum in consumption finance during the festive season (Navratri to Diwali), disbursing a record 6.3 million consumer loans, recording a growth of 27% in volume and 29% in value as compared to the same period last year. Structural reforms in income tax and GST by the government lifted consumer sentiment and spurred consumption.
Bajaj Finance Cuts AUM Growth Guidance for FY26
The Bajaj Finance management announced a revision in its AUM growth guidance for FY26 to 22–23%, down from the earlier target of 24–25% during a post-results conference call with analysts. The company expects to add around 1.7 crore new customers during the fiscal year.
The Net Interest Margin remained flat compared to the previous quarter. Managing Director Rajeev Jain highlighted that credit costs were elevated in Q2 and are expected to stay at the higher end of the guidance range of 1.85%–1.95% for the full year. However, the company anticipates a significant improvement in credit costs in FY27.
Bajaj Finance also expects the cost of funds to remain stable in the range of 7.5% to 7.55% for FY26. Meanwhile, the size of the MSME business has been reduced by 25% and continues to be closely monitored. The MSME segment is projected to grow modestly by 10–12% during FY26.
Bajaj Finance shares closed 1.8% at Rs 1,085.4 apiece on the BSE, ahead of the results, compared to a 0.4% rise in the benchmark Sensex.
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