Analysts believe that while growth momentum remains healthy, the focus will now shift to commenting on margins, credit costs and holiday demand trends in the coming quarters.
NII and margins: stable trends expected
According to Kotak Equities, Bajaj Finance is likely to post NII growth of 23-24% YoY, supported by higher volumes and a moderate increase in spreads to 8.5% from 8.4% in Q1FY26, aided by a marginal reduction in funding costs.
Margins are expected to remain stable at around 9.5-9.6%, according to Motilal Oswal and JM Financial estimates, while returns continue to benefit from portfolio repricing and a higher share of unsecured loans.
Emkay Global expects margins to gradually improve, driven by easing financing costs in an emerging soft interest rate environment. “The benefits of rate cuts are starting to materialize this quarter and support spreads,” the broker said in its outlook.
Asset quality and credit costs: no big surprises
Analysts expect credit costs to remain stable at around 2% of assets under management, largely in line with recent quarters. Kotak expects a cost-to-average AUM ratio of 3.8%, an improvement of 18 basis points year-on-year, due to operating leverage from scale and tighter cost controls. Emkay forecasts gross and net stage 3 ratios to hold at 1% and 0.5% respectively, highlighting strong collection efficiency and cautious underwriting. “Overall asset quality should remain robust, with credit costs moderating marginally to below 2%,” the report said.
Earnings outlook: expected increase of 23% year-over-year
Consensus estimates Bajaj Finance’s net profit growth at 23% year-on-year, supported by healthy operating profit and lower additional credit provisions. JM Financial said the company’s pre-provision operating profit (PPOP) is likely to see 7% sequential growth, reflecting steady performance in the lending sectors.
Motilal Oswal expects overall profitability to improve in line with growth in assets under management, adding that commentary on net interest margin (NIM) trajectory and credit cost trend will be key in gauging earnings sustainability for FY26.
Important factors to keep an eye on
Management outlook on demand and loan disbursement trends during the festive season, updates on digital lending initiatives and customer acquisition, commentary on impact of interest rate cycle on margins, shift in portfolio mix between secured and unsecured assets and credit cost guidance for H2FY26.
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