Bajaj Finance Shares Fall 7% After FY26 Growth Guidance Cut

On Tuesday, the Bajaj Finance share price was down 7.3%, touching a day’s low of Rs 1,005.30 on NSE after it reported Q2FY26 results, with core profitability gains and robust operational metrics, although asset quality pressures have emerged. The company’s results underline its strength in retail lending and its ability to expand the customer base, further capitalising on festive season demand and structural reforms in the Indian economy.

Financial Performance

Bajaj Finance’s consolidated net profit surged 23.27% year-on-year to Rs 4,947.76 crore for the Q2FY26 quarter, supported by a 22% increase in net interest income, which reached Rs 10,785 crore. Pre-provisioning operating profit also posted a growth of 21%. Assets under management (AUM) increased 24% year-on-year to Rs 4,62,261 crore, reflecting strong loan growth and ongoing traction across consumer and business lending segments. The company booked a record 6.3 million consumer loans during the festive season, marking a 27% rise in volumes and a 29% rise in loan value compared to the previous year. Bajaj Finance’s deposit book expanded by 5% year-on-year to Rs 69,766 crore, helping to support balance sheet stability.

Asset Quality and Management Actions

Despite healthy earnings, Bajaj Finance faced some challenges in asset quality. The share of gross non-performing assets (NPA) climbed to 1.24% from 1.03% in the previous quarter and 1.06% on a YoY basis, while net NPA increased to 0.60% versus 0.50% in Q1FY26 and 0.46% in Q2FY26. Loan losses and provisions were up 19% for the quarter, indicating that credit costs remain elevated. Asset quality concerns were particularly notable in the MSME and captive two and three-wheeler lending segments. The company has responded by reducing unsecured MSME loan volumes by 25%, with guidance that AUM growth for MSME lending will moderate to 10-12% for FY26. Management highlighted ongoing operational interventions to limit exposure to high-risk customers and improve the performance of new loan books outside MSME lending.

Business Operating Highlights

Bajaj Finance continued to demonstrate retail lending momentum, adding 4.13 million new customers during the quarter, bringing the active franchise to 110.64 million. New loan bookings reached 12.17 million in Q2FY26, a sharp increase from 9.69 million a year earlier. The company attributed much of this growth to government reforms in income tax and GST, which improved consumer sentiment and stimulated demand in consumption finance. The festive season, from Navratri to Diwali, provided a significant bump to disbursal volumes. Overall, operating income growth and expanding customer reach remained structural strengths for Bajaj Finance during the quarter.

Strategic Outlook and Management Commentary

Management remains confident about the prospects for retail lending, due to festive demand and supportive reforms in the broader economy. The company reiterated its focus on disciplined risk management, ongoing portfolio recalibration, and a stable earnings trajectory despite sector competition and asset quality headwinds. The guidance is lowered from 24% to 25% and cut down to 22% to 23% for FY26. Structural tailwinds from income tax and GST reforms are expected to foster consumer sentiment and support growth in financing across consumer categories.

Bajaj Finance’s Q2FY26 performance demonstrates the strength of its diversified lending franchise and its ability to capitalise on consumption cycles, but it also underscores the importance of prudent risk management, especially as credit costs remain elevated in specific loan segments.