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Bajaj Finance Ltd – Long-Term Investor Report

Lesson 84/225 | Study Time: 15 Min

Course: Top Quality Companies

Bajaj Finance Ltd – Long-Term Investor Report

(All figures in ₹ Crores unless mentioned)

1. Company Overview

Bajaj Finance Ltd (BFL), part of the Bajaj Finserv Group, is India’s leading diversified NBFC (Non-Banking Financial Company). It provides consumer finance, SME lending, commercial loans, mortgages, and rural finance. Over the last two decades, BFL has built a retail-heavy, granular loan book with industry-leading growth and asset quality.

2. Industry & Growth Prospects

NBFC Sector Outlook

NBFCs are expected to grow at 15–20% CAGR driven by rising credit demand from retail, MSME, and rural segments.
Key growth drivers: digital lending platforms, financial inclusion, consumer durables financing, and cross-selling of insurance and investment products.

Competitive Position

BFL remains a market leader in consumer & SME lending with strong risk management.
Low NPAs compared to peers.
Diversified loan book with significant cross-sell opportunities.

3. Historical Performance – AUM, Sales, Profit

Year	AUM (₹ Cr)	Sales (₹ Cr)	Profit (₹ Cr)	Margin %
FY2008	2,478	503	21	4%
FY2012	13,107	2,172	406	19%
FY2016	44,229	7,333	1,279	17%
FY2020	1,47,153	26,386	5,264	20%
FY2023	2,47,379	41,410	11,508	28%
FY2025	4,16,661	69,684	16,780	24%
Tr. FY2026E	4,41,150	73,108	17,679	24.9%

CAGR:

20 Years: Sales 35%, Profit 33%, EPS 24%
10 Years: Sales 29%, Profit 29%, EPS 34%
5 Years: Sales 23%, Profit 21%, EPS 26%

4. Asset Quality (NPA Trend)

Year	Net NPA %
FY2008	7.0%
FY2012	0.1%
FY2020	0.7%
FY2023	0.3%
FY2025	0.4%
Tr. FY2026	0.5%

👉 Bajaj Finance has demonstrated consistent asset quality improvement, bringing NPAs down from 7% in FY2008 to under 0.5% currently, far better than many NBFC peers.

5. Latest Q1 FY26 Highlights

Metric	Q1 FY26	Q1 FY25	Growth
AUM	₹4,41,150 Cr	₹3,54,192 Cr	+25%
Sales	₹19,524 Cr	₹16,100 Cr	+21%
Profit	₹4,854 Cr	₹3,955 Cr	+23%
EPS	₹7.57	₹6.33	+20%
Margin	24.9%	24.6%	Stable

Segmental AUM Growth:

Mortgages: ₹15,858 Cr (+24%)
MSME Lending: ₹6,109 Cr (+29%)
Quickest growth: Gold Loans (+82%) and Microfinance (+466%)
Weakness: 2W/3W Finance (-20%)

6. Valuation History

PE Band (Last 20 years):

Low: 1–3 (early years) → High: 80 (FY21 peak)
Recent: 24–35

PBV Band:

Ranged 1–10 historically
Currently ~3–6

7. Forward Estimates

FY2026E:

Sales: ₹85,014 Cr
Profit: ₹21,169 Cr
EPS: ₹34
Book Value: ₹160
Fair Value (Blended): ~₹947 per share

FY2030E:

Sales: ₹2,07,555 Cr
Profit: ₹44,399 Cr
EPS: ₹71
Fair Value (Blended): ~₹2,048 per share

FY2035E:

Sales: ₹5,16,463 Cr
Profit: ₹1,10,479 Cr
EPS: ₹177
Fair Value (Blended): ~₹5,096 per share

8. Risks & Rewards

Positives:

✅ Strong brand & parent backing (Bajaj Group)
✅ Diversified loan book with digital leadership
✅ Consistent profitability & RoE leadership
✅ Asset quality among the best in NBFC space

Risks:

⚠️ Rising competition from fintechs & banks
⚠️ Sensitivity to RBI regulations & interest rate cycles
⚠️ Credit risk from MSME and rural segments in downturns

9. Portfolio Allocation

Current Price: ₹9,11
Strategic Allocation: 4% in long-term diversified portfolio
Tactical Allocation: ~3.1% based on current valuations

Conclusion

Bajaj Finance remains a core long-term compounder in the NBFC sector. While near-term growth moderates, its strong franchise, digital innovation, and disciplined asset quality make it one of the best plays on India’s retail credit growth story.

Disclosure: This is an unbiased educational analysis, not a buy/sell recommendation.

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Piyush Patel

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