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Bajaj Finance (CMP - ₹1005, Mcap - ₹6,25,253 crore, Target price – 1,040, Rating - Hold) – “Steady Q2; lower guidance impact valuation…”

ICICIdirect Research 14 Nov 2025 DISCLAIMER

Bajaj Finance reported a stable Q2FY26 performance with strong AUM (consolidated) growth of 24% YoY to ₹4,62,261 crore, driven by 1.21 crore new loans (up 26% YoY) and a customer addition of 41.3 lakh, taking the franchise to 11.1 crore.
Net Interest Income rose 22% YoY to ₹10,785 crore, supported by 27 bps QoQ decline in cost of funds to 7.52%. Given captive auto finance book is running down and pace of disbursement in SME segment is being calibrated (10-12% growth in FY26), management has lowered credit growth guidance to 22-23% (vs 24-25%), prioritizing asset quality stability.
Asset quality remains broadly resilient, with GNPA/NNPA at 1.24%/0.60% (vs. 1.03%/0.50% in Q1FY26), driven by continued stress in the MSME and captive 2W/3W portfolios. Management maintained its FY26 credit cost guidance at 1.85–1.95%. Post run-down of captive auto book, credit cost is expected to decline resulting in surge in earnings in FY27E.
While Q2FY26 performance remained broadly steady, lowering of the credit growth guidance and credit cost at higher end of guidance, amid stress in certain pockets, impact valuation. Anticipating normalization, owing to run down of auto book, we continue to broadly maintain our neutral stance on the stock.

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