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Bajaj Finance (Target price – ₹1150, Rating – BUY) – Credit cost tailwinds to drive FY27 op. leverage

ICICIdirect Research 30 Apr 2026 DISCLAIMER

BFL reported a strong Q4FY26 with PAT growth 27%. AUM grew 22% YoY to ₹5,09,975 crore, crossing ₹5 lakh crore milestone, and is guided to grow 22–24% ahead, driven by continued traction in urban consumer and cross-sell businesses, strong momentum in gold loans with accelerated branch expansion, and steady contribution from mortgages, while MSME is expected to recover to double-digit growth from H2FY27 after risk calibration and captive 2W/3W book continues to wind down.
The company booked 1.2 crore new loans and added 39.3 lakh customers in Q4FY26, taking the franchise to 11.9 crore. Customer addition target for FY27 at 1.5-1.7 crore with overall franchise to reach ~12 crore.
RoA and RoE are expected to inch up at 4.4–4.6% and 19–20%, respectively, driven by three levers: 1) operating leverage from 22–24% AUM growth aiding cost absorption, 2) FINAI-led efficiencies lowering opex ratio by 25-40 bps vs current 33.8%, 3) and credit cost normalization to 1.45–1.6% supported by 2W/3W wind-down and MSME recovery.
FINAI remains the key enabler of operating leverage, with 203 AI-dedicated employees scaling to 363 by Jun-27 and 800+ autonomous agentic AI deployments planned across functions. Early benefits are visible in lower servicing costs, auto-QC in document processing and higher straight-through rates, with AI call center economics at ~one-third of human cost.

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