Bajaj Finance Ltd. expects to deliver 26-27% growth in fiscal 2027, signalling confidence in its business momentum despite anticipating marginal moderation in net interest margins (NIMs) going forward. The company expects the moderation to remain manageable, while fee income growth, improving funding costs and broad-based expansion across lending segments are expected to support performance.
During its post-results earnings call, the non-banking financial company (NBFC) said it expects fee income to grow 15-18% in fiscal 2027. Its cost of funds improved by nine basis points sequentially during the September quarter, while operating expenses as a proportion of net total income improved to 33%.
Bajaj Finance also said the winding down of its captive lending book could support an improvement in credit costs. The company continued to see growth in its gold loan portfolio, alongside broad-based growth across business segments.
Bajaj Finance Q2 Results: Profit Rises 29%
Bajaj Finance reported a 28.5% year-on-year increase in net profit to Rs 6,266 crore in Q2 FY27, compared with Rs 4,875 crore in the corresponding quarter last year. Net interest income (NII) rose 23.6% to Rs 13,334 crore from Rs 10,785 crore, while operating profit increased 23% to Rs 10,699 crore from Rs 8,685 crore.
Asset quality also improved on a year-on-year basis. Gross non-performing assets (NPAs) declined to 1.06% from 1.24% a year earlier, while net NPAs fell to 0.42% from 0.60%.
The results reflect continued growth in the company's lending business, supported by higher interest income and expansion across customer segments.
While Bajaj Finance expects continued growth in FY27, management indicated that NIMs could moderate marginally in the coming quarters. However, the company expects the impact to remain manageable. NIMs measure the difference between the interest income a lender earns on its assets and the interest it pays on its borrowings, relative to its interest-earning assets. Changes in lending yields, funding costs and the mix of loans can influence the metric.
READ | Bajaj Finance Q2 Results: Net Profit Rises 29%; AUM Surges To Rs 5.85 Lakh Crore
Bajaj Finance's cost of funds improved by nine basis points sequentially in Q2 FY27 to 7.31%. Lower funding costs can help cushion pressure on lending margins, although the overall impact will depend on loan pricing, competitive intensity and the composition of its portfolio.
The company also expects fee income to grow 15-18% in FY27, providing another source of revenue alongside interest income.
Bajaj Finance reported an operating expense-to-net total income ratio of 33% in Q2 FY27, compared with 33.1% in the year-ago quarter. The company expects this ratio to improve by 25-40 basis points during FY27. Management also recognised a macroeconomic overlay provision of Rs 337 crore during the September quarter. The additional provision reflects a prudent approach to potential risks in the operating environment.
Total loan losses and provisions stood at Rs 2,166 crore in Q2 FY27, compared with Rs 2,080 crore in the corresponding quarter last year. Excluding the additional provision, loan losses and provisions declined 12% year-on-year to Rs 1,829 crore.
The company expects the winding down of its captive lending book to act as a tailwind for credit cost improvement. The pace of this improvement will remain an important factor for investors tracking the company's profitability and asset quality.
Bajaj Finance continued to expand its gold loan portfolio during the quarter, adding 321 branches to its gold loan network. It had 2,022 gold loan branches at the end of September 2026. The company also reported broad-based growth across its lending segments, indicating that its expansion is not dependent on a single business line.
Its assets under management grew 26% year-on-year to Rs 5.85 lakh crore as of September 30, 2026. The company added Rs 37,680 crore to AUM during the quarter and booked 13.45 million new loans, up 11% from a year earlier.
Bajaj Finance expects to disburse 60-62 million new loans and add 18-20 million customers in FY27, underlining its focus on continued customer and business expansion.
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