📊 Bajaj Finance Q1 FY26 Results: Solid Growth, AI-led Efficiency, and Asset Quality Focus! 💼

Lesson 171/323 | Study Time: 10 Min

Course: Quarterly Result Updates & Analysis

📊 Bajaj Finance Q1 FY26 Results: Solid Growth, AI-led Efficiency, and Asset Quality Focus! 💼💥

CMP: ₹909 | Quarter: Q1 FY26 | Sector: NBFC | Date: 24 July 2025

🔍 1. Key Insights from Management 🎙️

From the concall and investor presentation:

📈 AUM Growth: ₹24,789 Cr added in Q1; total AUM grew 25% YoY to ₹4,41,450 Cr.
👥 Customer Addition: Added 4.69 million new customers; total franchise at 106.5 million.
🤖 AI Integration (FinAI): AI-led processes going live across business lines to boost productivity.
⚠️ Credit Caution: Elevated credit cost due to MSME and 2/3-wheeler stress. Measures underway to limit multiple loan exposures.
🏦 Leadership Update: Rajeev Jain continues as MD till March 2028, ensuring continuity post-resignation of Anup Saha.

🧾 2. Consolidated Financial Highlights 📈

Metric	Q1 FY26	Q1 FY25	Growth (%)
Revenue from Operations	₹16,697 Cr	₹13,724 Cr	22%
Net Profit (PAT)	₹4,765 Cr	₹3,901 Cr	22%
AUM	₹4,41,450 Cr	₹3,54,192 Cr	25%
Net Interest Income	₹10,227 Cr	₹8,365 Cr	22%
Net NPA	0.50%	0.38%	⬆️ Elevated
ROE (Annualised)	19.0%	19.9%	Marginal Dip
ROA (Annualised)	4.5%	4.6%	Slight Dip
EPS (Restated)	₹6.66	₹5.50	21% Growth

🏢 3. Segment & Regional Update 🌍

📌 Distribution Network: 4,192 locations; 239K distribution points.
🪙 Gold Loans: Now 2.3% of AUM; 85 new branches added.
🧑‍🌾 MSME Caution: Stage 2/3 increase due to MSME stress; 219 Cr of restructuring offered.
🛵 2 & 3-Wheeler Wind-down: AUM in these segments will be phased out due to high stress.

💹 4. Profitability, Growth & Valuation Ratios 📊

Ratio	Q1 FY26
ROE	19.0%
ROCE	~21%
EPS	₹6.66
P/E Ratio (@ ₹909)	~34x TTM EPS

📌 5. Industry-Specific KPIs (NBFC Lens) 🧾

🏦 Loan Loss to Avg. AUM: 2.02%
🏢 Credit Cost: ₹2,120 Cr (+26% YoY)
💰 Cost of Funds: 7.79% (expected to decline further)
🔄 GNPA / NNPA: 1.03% / 0.50%
📉 Deposit Share in Borrowings: Dropping to 15–16% from 19%

📆 6. FY26 Outlook & Forecast 🔮

📈 FY26 Estimates (based on current run-rate and trends):

Metric	Estimate (FY26)
Sales Growth	23%
PAT Growth	25%
Profit Margin	~24.4% Sustained

🔭 7. Outlook – Near & Long-Term 🚀

Near-Term (Q2–Q3 FY26):

📌 Focus on tightening MSME and rural B2C lending.
🛠️ Expect stable margins aided by improved cost of funds.
🤖 AI deployment expected to improve Opex efficiency.

Long-Term (FY26–FY30):

🧠 Digital transformation with FinAI will be key growth lever.
🌱 Diversified portfolio and deep penetration to drive sustained AUM growth.
⚠️ Monitoring rural credit risks due to emerging political and economic factors.

🧭 8. Investor Conclusion 📝

✅ Positives:

Consistent PAT and AUM growth
AI-led margin and cost improvements
Strong asset quality compared to peers
Robust leadership stability

⚠️ Risks:

MSME and 2/3-wheeler portfolio stress
Rural portfolio facing state-specific challenges (e.g., Karnataka)
Elevated credit cost continues to impact NIM

🎯 Long-Term View: Cautiously Optimistic (Hold/Add on Dips)
Backed by technology, scale, and prudent cost management, Bajaj Finance remains a long-term compounder with short-term stress in select segments.

📜 9. Disclosure

"This analysis is provided solely for informational purposes and does not constitute investment advice. Investors should perform their own due diligence before making investment decisions."

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Piyush Patel

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