Bajaj Finance Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Bajaj Finance Ltd trades at ₹1,035, in a confirmed uptrend and 10 weeks into that stage. That is +4.6% against its own 200-day average. It sits at 66% of a 52-week range of ₹827 to ₹1,141. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 19 straight weeks.

Today the stock is in a confirmed uptrend — week 10 of stage 2, confirmed. At ₹1,035 it trades +4.6% versus its 200-day average and sits at 66% of its 52-week range (₹827–₹1,141).

Against the market, two honest reads. Cumulative: over the last 10.5 years the stock moved +1,516% while the NIFTY 500 moved +267% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 19 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Bajaj Finance Ltd's story is not scored yet against the markers our research file set on 22 August 2026. Where it sits in its own cycle: Not stated in the research file. Our fortnightly research layers last read it on 22 August 2026.

Our read, 22 August 2026. Bajaj Finance is a consumer lender whose price-to-book valuation is compressed against its own history while the credit cycle has now confirmed a trough — Jun 2026 GNPA of 0.96% broke below 1.0% for the first time since Sep 2024.

What is proven. Bajaj Finance is a consumer lender whose price-to-book valuation is compressed against its own history while the credit cycle has now confirmed a trough — Jun 2026 GNPA of 0.96% broke below 1.0% for the first time since Sep 2024.

What is not proven yet. A renewed deterioration in GNPA above 1.1% in the Sep 2026 quarter — reversing the confirmed two-quarter improvement — combined with no evidence that the Mar 2026 and Jun 2026 gains came from structural segment management rather than seasonal collections, would break the credit-trough thesis and make re-rating toward the P/BV median unjustified.

🚨 What would change our mind. A renewed deterioration in GNPA above 1.1% in the Sep 2026 quarter — reversing the confirmed two-quarter improvement — combined with no evidence that the Mar 2026 and Jun 2026 gains came from structural segment management rather than seasonal collections, would break the credit-trough thesis and make re-rating toward the P/BV median unjustified.

Layer 1 read, 22 August 2026 — KEEP. Bad loans have fallen three quarters running while the shares sit near their cheapest-ever valuation versus book. Bajaj Finance's bad loans peaked at 1.24% in Sep 2025 and have improved every quarter since to 0.96%, with the money actually set aside for bad debts falling from 1.9% to 1.5% of the loan book — so the improvement is real cash, not a reclassification. Meanwhile the loan book grew 24% and quarterly profit 27.6% year on year to Rs 6,081 Cr. The shares trade at 5.98 times book value against a ten-year average of 7.7 times, the 16th percentile of that decade, having fallen 55% from their peak multiple while profits compounded sixteen-fold. The check on enthusiasm: six times book is a premium price in absolute terms, defensible only while this business keeps earning 18% on equity.

What would change Layer 1’s mind. Sep 2026 bad loans printing above 1.05% — that would reverse the three-quarter improvement and mean the Mar and Jun gains were seasonal collections rather than the structural portfolio management the case assumes. Because the entire thesis is "the credit cycle turned and the multiple has not yet noticed", one bad quarter does not merely trim the target, it removes the reason to pay six times book at all. The sharper version of the timeline's own break-condition: bad loans above 1.05% AND…

Layer 2 read, 22 August 2026 — ADVANCE. The lender cycle has turned, and outside evidence confirms the improvement is broad. Bajaj Finance's bad loans improved to 0.96% and loan-loss cost fell from 1.9% to 1.5% of loans, while the sector found the same direction across all nine covered lenders. The sector timeline is ALIGNED and TURNING_AROUND, and institutions added 5.654 percentage points over four quarters. The -54.3% margin-of-safety warning is a ⚠ model output from the wrong DCF lens for a lender; requires price to book against return on equity instead.

What would change Layer 2’s mind. Flip ADVANCE to DROP if Bajaj Finance's bad-loan ratio rises above 1.10% in the next reported quarter while loan-loss cost also moves back toward the earlier level, showing the sector turn came from tighter selection rather than durable credit improvement.

Layer 3 read, 22 August 2026 — DEPLOY. Core lending delivered through the credit stress; the scary DCF warning uses the wrong model. Management cut stressed lending growth before bad loans fell to 0.96% and loan-loss cost fell to 1.5% of assets; that aligns with Timeline R1 but mitigates it rather than escalating it. The -54.3% margin-of-safety warning is a model output, not a hard fact, and the Timeline says lenders must be judged on book value and returns. A small historic reporting penalty remains a minor conduct mark, not a management failure.

What would change Layer 3’s mind. A Sep 2026 report showing GNPA above 1.10% together with loan-loss to AUM above 1.8% would reverse the credit-trough evidence and flip DEPLOY to DROP.

CIO read, 22 August 2026 — BENCH. NOT ADMITTED (incoming, benched) · forward-asymmetry 61/100 · CONTESTED. The loan book grew 24%, quarterly profit grew 27.6% to Rs 6,081 crore, and gross bad loans improved to 0.96%. Price-to-book is at the 9th percentile on the card but remains 5.9 times in absolute terms; a positive 1.2-point sustain gap and a turning lender cycle make it a plausible challenger under the DEPLOY regime.

What the company does. The lending franchise is growing at 24% while the price-to-book multiple sits at the 9th percentile of 10-year history. Jun 2026 results confirmed the credit cycle has peaked: GNPA improved to 0.96%, PAT grew 27.6%, and loan-loss to AUM fell from 1.9% to 1.5%. The investment case is now a re-rating as the market upgrades its view of sustainable return on equity — the key risk is whether the improvement holds through the softer economic quarters ahead.

🚨 What the surface reading misses. The surface reading is: P/BV 5.9x is compressed versus history — mean-reversion potential of 30% to median. The research reads it further: P/BV compressed from 10.8x (Dec 2021) while EPS grew substantially over the same period — the multiple compression is sentiment and credit-cycle driven, not earnings-destruction driven. The market is pricing higher-than-historical credit costs and ROE compression rather than franchise impairment.

🚨 What the surface reading misses. The surface reading is: ROE declining — management quality or earnings deterioration. The research reads it further: ROE fell because of cyclical elevated credit costs in MSME and two-wheeler segments plus scale dilution. At 18.2%, ROE sits below the 10-year median but above the FY22 COVID-cycle low of 17%, suggesting the current level is cyclically depressed rather than at the structural floor.

Sources: our stock research file (22 August 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue For a bank, revenue is everything the franchise earns — interest on the loan book plus fee and other income.

Bajaj Finance Ltd reported ₹23,165 Cr of income in the Jun 26 quarter, +18.6% year on year. That is the 11th straight quarter of year-on-year growth. Over 10 years it has compounded at 27.4% a year. The last full year, FY26, came in at ₹81,985 Cr. The last four reported quarters add to ₹85,963 Cr.

Why this happened. The Bajaj Finserv consolidated story has historically been discounted relative to pure-play lending peers because insurance contributed low profits with high capital. Life 2.0 delivered VNB margin of 24.5% (the highest in the company's history) and the protection strategy continues: group protection grew approximately 100% in Q1 FY27 supported by MFI revival and over 20 new partners. AMC reached Rs 31,400 crore AUM, SIP book grew 66%, and non-group assets are 91%. Bajaj Markets generated operating revenue of Rs 107 crore in Q1 FY27, up 32%, with trail revenue of Rs 15 crore now building a recurring income base. Allianz buyback is complete; insurance dividends now flow exclusively to Bajaj…

FY26 revenue came in at ₹81,985 Cr (+19.1% on the year), capping 10 years at 27.4% compound. The latest quarter (Jun 26) printed ₹23,165 Cr, +18.6% year on year — the 11th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +17.8% growth against the decade's 27.4% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +17.8% over the last 4 quarters against +21.1%/yr over the last 8 — rolling over; TTM profit +17.1% vs +17.6%/yr — stabilising.

Net margin Net margin — what the bank keeps of every ₹100 of revenue after every cost, provision and tax. It is the cleanest single margin we can read for a lender.

Bajaj Finance Ltd's net margin is 26.3% in the Jun 26 quarter, +1.9 percentage points against the same quarter a year ago. Across 13 fiscal years the net margin has ranged 16.6% to 27.8%. The current quarter sits inside that band.

The latest quarter's net margin is 26.3%, +1.9 pp against the same quarter a year ago. Across 13 fiscal years the net margin has ranged 16.6%–27.8%.

Why: the numbers show the net margin move clearly, but the cost lines behind it sit below what we hold — so we state the move without inventing its driver.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Bajaj Finance Ltd earned ₹6,081 Cr of net profit in the Jun 26 quarter, +27.6% year on year. It is the 2nd consecutive quarter of growth. Full-year FY26 profit was ₹19,332 Cr. The 10-year compound rate is 31.2%. That is 26.3% of the quarter's revenue. The same quarter a year earlier earned ₹4,765 Cr.

Jun 26 profit was ₹6,081 Cr, +27.6% year on year — the 2nd consecutive quarter of growth. On the full year, FY26 printed ₹19,332 Cr (+15.2%), and the 10-year compound rate is 31.2%.

Why profit moved: revenue contributed +18.6% and the margin +1.9 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +16.9% vs revenue +17.8%. Profit and revenue are moving roughly in step.

Asset quality — the ladder Gross NPA is the slice of the loan book where repayments have stopped. Net NPA is what remains after the money already set aside against those loans. Falling is healing; rising is damage arriving.

Bajaj Finance Ltd's gross NPA is 0.96% of the loan book in Jun 26, down from 1.03% a year ago. Net of provisions already set aside, 0.39% remains. That is the 3rd straight quarter of improvement. Across the 12 quarters held here the book has ranged 0.85% to 1.24%.

Why this happened. ROE declined from 23% (FY23) to 18.2% (current) over three years, driven by elevated credit costs in two-wheeler and MSME segments and opex investments in AI and gold branches. The Opex/NTI ratio at Bajaj Finance was 33.4% in Q1 FY27 versus 33.1% a year ago — marginally higher due to gold branch expansion — but management guided a 25-40 basis-point improvement in the current financial year as AI implementation generates efficiencies. If credit costs normalise in FY27 (the GNPA trajectory suggests they are), PAT margins should recover from the 24-25% range back toward the FY23 level of 27-28%, driving ROE recovery toward 20-21%. The opex guidance is specific and range-bound, making it a…

Jun 26: gross NPA at 0.96% and net NPA at 0.39%, against 1.03% / 0.50% a year ago. Over the 12 quarters we hold, the book's worst reading was 1.24% and its best is 0.85%. The ladder has now improved for 3 consecutive quarters.

The synthesis: profit growth at a bank is only as good as the book behind it, and this book is healing on a multi-quarter streak. A note on depth: quarterly provisioning detail is not in our numbers yet, so this ladder reads levels and trend, not the cost of the cleanup.

Why the ladder moved: recoveries, write-offs and slippages each play a part, and that split sits below what we hold — the numbers show the healing; the driver mix does not travel with them.

The loan book We read the loan book through revenue — when the book grows, revenue grows with it. It is a rough proxy, and we say so: rate moves and fee swings can shift it a few points in any one year.

Bajaj Finance Ltd's revenue grew +19.1% in FY26 to ₹81,985 Cr, so the book is growing. The latest quarter ran +18.6% year on year. The net margin on that income is 26.3%, +1.9 percentage points against a year ago. Interest income is a proxy for the book; rate moves can shift it a few points in any one year.

Why this happened. Bajaj Finance reached AUM of Rs 5.47 lakh crore in Jun 2026, growing 24% year on year — up from 22% growth in Mar 2026. New loans booked were 1.6 crore in Q1 FY27. Net total income grew 22% to Rs 15,224 crore. The growth is broad-based across consumer credit, gold loans, housing finance (home loans up 20%, LRD up 41%), and SME. Gold loan branch expansion — the source of sequential Opex/NTI pressure — represents a secured-lending diversification away from the unsecured segments that drove the 2025 credit stress. At Rs 5.47 lakh crore, AUM to net total income yield is approximately 2.8%, providing consistent income visibility.

FY26 revenue was ₹81,985 Cr, +19.1% on the year, and the latest quarter ran +18.6% year on year. The net margin on that revenue is 26.3% this quarter (+1.9 pp YoY) — growth with a widening margin on it.

The synthesis: a lender compounds when the book grows while the margin holds and the loan book stays clean — gross NPA is the loan-quality read we carry here.

Returns on equity and assets Two numbers rate a bank: ROE — what it earns on shareholder money — and ROA — what it earns on everything it deploys. ROE above ~13–15% earns its keep; below that, growth builds book slowly.

Bajaj Finance Ltd earns a return on equity of 18% in FY26. Its trough over the ladder below was 13% in FY21. For a lender the balance sheet is the operating asset, so equity return and asset return have to be read together.

FY26 ROE came in at 18%, recovered from a FY21 trough of 13%. Return on assets is withheld on this page — its two source series disagree for this quarter. That clears the bar a bank must beat for its book value to compound.

Why ROE moved: profit compounded 31.2% a year over 10 years while the equity base grew more slowly — earnings recovering faster than book value builds is what lifts ROE off a trough.

Debt

For a bank, borrowings are raw material, not a warning sign — solvency is read through the returns and the loan book. A manufacturer’s debt is a claim against its profits, so the debt-to-equity lens that works everywhere else misleads on a lender and is not applied here.

A manufacturer’s debt is a claim against its profits; a bank’s borrowings are its inventory — money taken in to be lent out. The debt lens that works everywhere else misleads here, so this page does not apply it. The solvency questions for a bank — is the loan book sound, is the equity earning — are read through the loan-book and returns sections above.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions added 2.1 points of Bajaj Finance Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 16.3% of the company. Foreign institutions moved −0.9 points over the same window, to 20.2%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: +2.1 points over 8 quarters to 16.3%; Foreign institutions: −0.9 points over 8 quarters to 20.2%; Promoters: +0.0 points over 8 quarters to 54.7%.

Why the register moved: domestic institutions drove it (+2.1 points), absorbed on the other side by foreign institutions (−0.9 points) — steady accumulation by institutions reading the same numbers this page reads.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Bajaj Finance Ltd: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre. The Z-score was built for manufacturers and is not applied to banks and lenders, so solvency here is read from the capital and asset-quality lines instead.

The safety line in one sentence: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre.

Valuation For a bank we price the book, not the earnings: P/BV is what the market pays for each ₹1 of the bank's net worth. A bank below 1× book is priced below the value of what it owns, net of what it owes.

Bajaj Finance Ltd trades at 5.7× P/BV, near the bottom of its own range — cheaper only 8% of the time. Its long-run median P/BV is 7.9×, measured across 10.5 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/BV of 5.7× is near the bottom of its own range — cheaper only 8% of the time, against a long-run median of 7.9× measured over 10.5 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year book value grew while the price moved +3.1% — price and book moved together, holding the multiple in its range.

The price move, decomposed: over 5y, of the +6.8%/yr price move, ~+24.2%/yr came from book-value growth and ~−17.4 pp from the multiple (compressing); over 10y, of the +24.5%/yr price move, ~+29.5%/yr came from book-value growth and ~−5.0 pp from the multiple (compressing). The split is the honest approximate (price return minus book-value growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the book-value line underneath it, not the multiple.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

Solved at its 25 August 2026 price, Bajaj Finance Ltd was paying for profit growth of about 20.8% a year. Profit itself has compounded 31.2% a year over the past 10 years. Today the market pays 5.7× P/BV, the 8th percentile of its own 11-year range.

What the two numbers say together. The multiple is low against its own past, and the growth the price is paying for is below what this company has actually delivered.

How to hold this number: it is a reading of one day's price, taken on 25 August 2026, not a running figure — every other number on this page, the multiple included, is read off the live quote as of 11 September 2026. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements.

Stage: Consistent Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Bajaj Finance Ltd reads as consistent on its fundamental arc. Consistent — revenue, profit and EPS growth have stayed positive through the window, with ROE at 17.6% and holding. The read is built from 10 quarters across 4 curves, on full evidence.

Why it matters: steady curves with healthy returns are the compounding setup — the risk is the price, not the business.

4-Factor Sector Score

59.7/100 — rank 2 of 9 in Conglomerate Backed NBFC · 100% evidence confidence

Bajaj Finance Ltd scores 59.7 out of 100 against the 9 companies it is compared with in Conglomerate Backed NBFC, ranking 2. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 17.3 + 23.9 + 7.5 + 11 = 59.7. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if ROA rolls over or gross NPA rises while sector-relative strength deteriorates.

Said versus delivered

What Bajaj Finance Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

🚨 MSME Recovery Growth Expectation Progressively Downgraded · 29 April 2026. In the Nov 2025 call, management expected MSME to be back in 'growth mode' by March-June 2026. By Feb 2026, the target was upgraded to the business being 'back in the 20s' growth by Q1-Q2 FY27. The Apr 2026 call reveals MSME grew only 6% for full-year FY26 and management now expects only double-digit growth - not 20s - by Q2-Q3 FY27, a material step-down from the Feb 2026 guidance without explicit new justification beyond 'proactive risk actions' already cited in prior calls, directly impacting modelling of MSME's contribution to portfolio mix and overall AUM growth quality.

🚨 FY27 New Customer Addition Guidance Decelerates vs FY26 Actuals and 200M Target Trajectory · 29 April 2026. In the Feb 2026 call, management guided FY26 new customer additions at 17-18 million and simultaneously projected reaching 200 million customers in 3-4 years. FY26 actual additions came in at 17.5 million. The Apr 2026 call then guides FY27 additions at only 15-17 million - below both FY26 guidance and FY26 actuals - with no explanation for the implied deceleration. At 15-17 million per year, reaching 200 million from 119.3 million at year-end FY26 would take 5+ years, which is inconsistent with the 3-4 year aspiration stated in Feb 2026 and raises questions about how management reconciles the decelerating near-term trajectory with its publicly stated franchise ambition.

FY26 AUM Guidance Lowered · 3 February 2026. Management has consecutively lowered full-year AUM growth guidance across recent quarters. After guiding for 23-24% growth in July 2025 and revising it to 22-23% in November 2025, the latest call further reduces the expectation to 21-22%, citing a conscious decision to slow down specific businesses. Later call (Feb 2026): “We think it will take us two to three more quarters before we are back to 20% growth... full-year growth will be between 21% and 22%.”

Unsignaled Structural Provisioning Change · 3 February 2026. In the prior call, management maintained credit cost guidance based on organic portfolio performance without signaling structural methodology changes. The latest call introduces a sudden 'permanent' change to LGD floors triggering a ₹1,416 crore provision (conveniently offsetting a one-time gain), representing a significant unguided shift in how balance sheet resilience is calculated. Earlier call (Nov 2025): “We expect full year credit cost to come within 1.85% to 1.95% for FY”. Later call (Feb 2026): “The company has further strengthened its provisioning framework by implementing a minimum Loss Given Default (LGD) floor... The company has made a 1,416 crore provision on an accelerated basis... This is purely a proactive and voluntary measure.”

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions