During the quarter, new loans booked rose 26% to 1.22 crore, compared to 97 lakh loans in Q2FY25.On the asset quality front, credit losses and provisions rose 19% to Rs 2,269 crore in Q2FY26 from Rs 1,909 crore a year earlier. Annualized credit losses and provisions for average assets under financing amounted to 2.05%.
As of September 30, 2025, gross NPA and net NPA were reported at 1.24% and 0.60%, respectively, compared to 1.06% and 0.46% a year ago. The provision coverage ratio for phase 3 assets was 52%.
Also read: Bajaj Finance shares could fall to Rs 640? What Bernstein, Jefferies and other brokers predict On the profitability front, the company posted a profit after tax (PAT) of Rs 4,875 crore, up from Rs 4,000 crore in the same quarter last year, though slightly below Street estimates of Rs 4,969 crore. 8,838 crore in the year-ago period. Net total income rose 20% from Rs 10,946 crore to Rs 13,170 crore, while operating profit before provisions (PPOP) rose 21% from Rs 7,307 crore to Rs 8,874 crore.
The customer franchise expanded to Rs 11.06 crore as on September 30, 2025, from Rs 9,209 crore a year earlier, registering a growth of 20%. Its customer base grew by 41.3 lakh during the July-September 2025 quarter.
During the quarter, the number of new loans booked stood at 1.22 crore, reflecting a 26% increase over the 97 lakh loans booked in Q2FY25.
The customer franchise stood at Rs 11.06 crore as on September 30, 2025, compared to Rs 9,209 crore as on September 30, 2024. This represents a YoY growth of 20%. Its customer base grew by 41.3 lakh in the July-September 2025 quarter.
In terms of asset quality, credit losses and provisions rose 19% to Rs 2,269 crore in Q2FY26, compared to Rs 1,909 crore in Q2FY25. Annualized credit losses and provisions for average assets under financing for the quarter were 2.05%.
As on September 30, 2025, gross non-performing assets (GNPA) and net NPA were reported at 1.24% and 0.60%, respectively, compared to 1.06% and 0.46% as on September 30, 2024. The provision coverage ratio for phase 3 assets was reported at 52%.
Post the company’s second quarter results. Here’s what investors need to do:
Morgan Stanley: overweight| Target price: Rs 1,195
Morgan Stanley maintained its ‘Overweight’ rating on Bajaj Finance, revising the price target to Rs 1,195 from the previous Rs 1,150. The brokerage has revised down its FY26 assets under management (AUM) growth expectations to 22-23% from the previous range of 24-25%. Furthermore, net interest margin (NIM) is expected to remain flat, as opposed to the 10 basis points increase previously expected.
Bajaj Finance’s profit after tax (PAT) in the second quarter rose 22% year-on-year, in line with expectations. However, earnings per share (EPS) projections have been cut by 1.5% for FY26 and 1.1% for FY27. Credit costs remain stable at around 195 basis points, with stress levels at the lowest level in the past eight quarters.
Morgan Stanley also expects lower credit costs and improved cost efficiency in the future. Bajaj Finance’s valuation is around 24 times its price-to-earnings ratio for the December 2026-2027 period. This is supported by an expected compound annual growth rate (CAGR) per share of over 25% for FY25-27 and a return on equity (ROE) of 21% for FY27.
The brokerage considers Bajaj Finance to be the strongest performer among large-cap financial institutions and recommends buying the stock during dips.
Bernstein: underperformance| Target price: Rs 640
Bernstein maintains ‘Underperform’ rating on Bajaj Finance, with a target price of Rs 640. While the company’s Assets Under Management (AUM) rose 24% year-on-year and profit after tax (PAT) rose 23% year-on-year, Bernstein highlighted that stress is building across multiple segments.
Gross and net non-performing assets (GNPA/NNPA) ratios stood at 1.24% and 0.60%, respectively, compared to 1.03% and 0.50% in the previous period. The incremental NPL ratio is around 2%, indicating increasing pressure on asset quality.
Credit losses were reported at 205 basis points, exceeding expectations for the second consecutive quarter. Bernstein suggested an upward revision to credit cost estimates is likely.
Growth in the SME loan segment slowed to 18% year-on-year, compared to 29% previously. Furthermore, volumes in the unsecured SME loan segment fell by 25%, highlighting the increased caution in this segment.
Despite challenges, the net interest margin (NIM) remained stable, helped by a 27 basis point reduction in financing costs and strict cost control. However, operating costs (opex) increased by 18% year-on-year.
Bernstein remains cautious on Bajaj Finance, citing concerns over rising non-performing loans, higher credit costs and continued margin pressure.
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(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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