This article first appeared on GuruFocus .
Release Date: July 31, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Bajaj Finserv Ltd ( BOM:532978 ) reported strong consolidated growth, with total income up 19% and profit after tax up 18% year-on-year.
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Bajaj Life delivered a robust performance with retail WRP growing 17.5%, VNB surging 87%, and new business margins expanding to 15.9% from 11.1%.
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Bajaj Finance continued its strong momentum with a 27.6% PAT growth, improved asset quality (GNPA at 0.96%), and a strong capital adequacy ratio of 20.9%.
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Bajaj Housing Finance maintained excellent asset quality with GNPA at 0.29% and NNPA at 0.12%, while achieving 24% growth.
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The company is confident in its path to profitability for emerging businesses, with Bajaj Finserv Direct expected to break even in Q3/Q4 of FY27 and Bajaj Finserv Health in FY28.
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Bajaj Markets is back on a growth trajectory with a 32% increase in operating revenue, driven by a stable and predictable trail revenue base.
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The board approved setting up a reinsurance company, which is a natural progression to further strengthen insurance capabilities.
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Bajaj Asset Management Company saw AUM grow 26% to ?31,400 crores, with a strong 63% equity mix and a 66% surge in SIP books.
Negative Points
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Bajaj General Insurance's underwriting loss widened to ?130 crores from ?116 crores, with an elevated combined ratio of 104.7% due to high health loss ratios and pricing pressures.
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The general insurance business experienced a tactical reduction in the motor segment due to elevated pricing pressures, leading to lower-than-industry growth.
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Both insurance companies saw a decline in profits due to lower capital gains booked in the quarter, impacted by the external macro environment and ESB impact.
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Bajaj Finserv Health registered a small degrowth in transactions due to restructuring required in some partnerships following new RBI regulations.
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The company acknowledged some persistency issues across certain cohorts in the life insurance business, which is in line with market trends.
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The general insurance market is currently soft, with pricing lower than average across all lines, which could continue to stress underwriting results.
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Bajaj Housing Finance's net interest income growth was muted at 9% due to attrition of higher-rate portfolios.
Q & A Highlights
Q: What is the impact of the Supreme Court ruling on motor third-party (TP) calculations for homemakers, and what measures is the industry taking? A: Tapan Singhel, MD & CEO of Bajaj General Insurance, stated that the initial reaction to the ruling is not fully applicable as of now, and the company's conservative reserving for TP already provides a buffer for any potential increase. The number of such cases in the books is very few and immaterial. The industry is asking the Ministry of Finance for a TP price hike, and the company does not see a need to strengthen reserves at this stage.
Q: Can you provide an update on the credit quality trends on the Bajaj Markets platform, given industry concerns about asset quality in digital lending? A: Ashish, MD & CEO of Bajaj Finserv Direct, noted that while credit quality at the industry level was a concern, the situation has improved over the last few quarters as lenders have moved towards a better risk matrix. Partners are growing their business with Bajaj Markets, and the company has direct insight into portfolio behavior through select deals, with which it is happy with the results.
Q: What is the estimated impact of current natural disasters and floods on Bajaj General's underwriting results, and how is the company navigating the soft pricing cycle? A: Tapan Singhel explained that the Indian market is currently in a soft pricing cycle due to a lack of major catastrophic losses, but Bajaj General has consistently outperformed the market by selecting the right business and shifting lines as needed. The company's reinsurance treaties are robust to handle catastrophe impacts, and while the market is stressed, Bajaj General's combined ratio remains the best in the industry.
Q: What is the path to profitability for the emerging businesses like Bajaj Finserv Direct and Bajaj Finserv Health? A: Ramandeep, President of Bajaj Finserv, outlined that Bajaj Finserv Direct is expected to break even in Q3 or Q4 of FY27, with a full-year break-even in FY28. Bajaj Finserv Health is expected to break even in Q3 or Q4 of FY28. Ashish added that the shift to trail revenue provides nonlinearity to the bottom line, and Deepak Mathai noted that health will continue to invest in technology and network, with capital infusion needed for another 6 quarters.
Q: What drove the significant jump in group protection business for Bajaj Life, and is it sustainable? A: The growth is a combination of revival in the industry and new partnerships. The company has added more than 20 partners in the last 15 months, reducing its dependence on a few large partners. The business is now more diversified across subsectors within the lending sector, and the company continues to focus on this growth.
Q: How is Bajaj Life managing its product mix between annuity and non-par products, and what is the impact on margins? A: The management clarified that annuity and non-par products are distinct but share a similar chassis. The focus on annuity is driven by the growing risk of living longer for customers aged 50+. On margins, the company has taken a structured approach to absorb the GST impact, adding riders to products without increasing commissions, which has helped maintain profitability. The company aims to increase the non-par mix further.
Q: What is the trajectory for the tender-based businesses (crop and government health) for Bajaj General in the current year? A: Tapan Singhel stated that the crop business tender this year is expected to be more than last year. The government health business is a 2+1 contract, so the renewal is automatic, though the number of lives covered may be slightly less than last year due to overlaps.
Q: What is the timeline and impact of the transition to Ind AS for the insurance companies? A: Ramandeep explained that both insurance companies have received forbearance from IRDAI, making the effective date for Ind AS adoption April 1, 2027. The biggest impact will be the amortization of acquisition costs over the contract duration. For general insurance, long-term TP liabilities will need to be discounted, leading to a release. There is also the concept of onerous contracts, which could create arbitrage for Bajaj General as competitors writing loss-making contracts may face capital calls.
Q: What is the rider attachment rate for Bajaj Life, and what is the aspirational level? A: The management indicated that 22% of new business premiums have some rider or the other, across both term and savings plans. The intent is to keep increasing this number, and the company is focused on selling multifarious riders to improve product mix and profitability.
Q: What is driving the higher loss ratio in the motor own damage (OD) segment, and what is the strategy for FY27? A: Tapan Singhel stated that the increase is a market phenomenon, and the company uses a return-on-risk capital model for selection. Bajaj General has tactically slowed down motor business due to inadequate pricing, and will continue to do so until pricing improves. The company focuses on protecting the bottom line and will increase volume when margins are adequate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
