This article first appeared on GuruFocus .
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Assets Under Management (AUM) Growth:Increased by 24% to ?462,261 crore.
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New Business Contribution:Gold loans, new car loans, and CV tractor loans contributed 3% to overall growth in Q2.
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MSME Growth:Moderated to 18% due to a risk-first approach.
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Customer Franchise Expansion:Expanded to 110.64 million, with 4.13 million new customers added in Q2.
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Cost of Funds:Improved by 27 basis points, standing at 7.52% for FY26.
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OpEx to Net Interest Income (NTI):Improved to 32.6% from 33.2% in Q2 last year.
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Loan Loss to Average AUM:Increased to 2.05% from 2.0% in Q1.
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Gross NPA and Net NPA:Reported at 124 basis points and 60 basis points, respectively.
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BHFL Growth:AUM growth of 24% with a PAT growth of 18% and ROA of 2.3%.
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BFSL Performance:AUM growth of 40% and profit increase of 27%.
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Festive Period Performance:Record 6.3 million loans disbursed, up 27% in volume and 29% in value year-on-year.
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Release Date: November 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Bajaj Finance Ltd ( BOM:500034 ) reported a 24% growth in assets under management (AUM), reaching 462,261 crores, driven by secular growth across various business lines.
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The company added 4.13 million new customers in Q2, expanding its customer franchise to 110.64 million, with expectations to add 16 to 17 million new customers in FY26.
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Operating efficiencies improved, with OpEx to NTI ratio decreasing to 32.6% from 33.2% in the previous year, aided by AI implementation across business lines.
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The festive season performance was strong, with a record 6.3 million loans disbursed, marking a 27% increase in volume and 29% in value year-on-year.
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Bajaj Finance Ltd ( BOM:500034 ) is advancing its AI and technology initiatives, with significant progress in AI-powered service bots and process automation, expected to enhance cost and productivity benefits over the next 12 to 18 months.
Negative Points
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Credit costs remained elevated in Q2, with expectations for full-year credit costs to be at the upper end of the guided range of 1.85% to 1.95%.
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MSME growth moderated to 18% as part of a risk-first approach, with the company cutting unsecured MSME volumes by 25% due to incipient stress.
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The captive two-wheeler and three-wheeler business, contributing to 1.5% of AUM, accounted for 9% of overall loan losses, impacting asset quality.
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The company revised its growth guidance for FY26 to 22-23%, down from the earlier 24-25%, due to risk actions in the MSME business.
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Stage 3 assets saw an increase, attributed to the peculiar situation of additional days in Q2, with MSME and two-wheeler segments contributing to the rise.
Q & A Highlights
Q: With respect to growth, you've indicated mortgages and SME growing slightly slower, but festive appears strong. Are there other segments you're worried about in terms of growth? A: Both mortgages and SME contribute significantly to the balance sheet. While their growth is slower, other businesses like gold loans and car loans are picking up the slack. We remain excited about these other segments.
Q: Regarding asset quality, stage 3 is moving up. Is this largely due to flow from stage 2? A: Yes, the increase in GNPA is due to the peculiar situation of having more days in Q2, causing customers at the edge to cross 90 days overdue. Year-on-year, the increase is mainly due to the two-wheeler and MSME segments.
Q: On MFI lending, there's a 217% growth year-on-year. Has the pain in the industry peaked? A: We are too small in MFI to comment on the industry. Our focus is on our portfolio, which remains carefully managed. The tractor finance business is also small but promising, with a 75% new and 25% used mix.
Q: As fintech and NBFCs scale up, how is Bajaj Finance building a strong edge? A: We focus on long-term planning, technology leadership, and process automation. Our strategy involves building businesses with a 10 to 15-year view, ensuring we deliver short-term, medium-term, and long-term goals simultaneously.
Q: On margins and cost planning, how do you manage to keep profits in line as costs rise? A: We leverage process automation and technology to generate velocity and scale, ensuring costs decrease. Our early adoption of technology and AI helps maintain efficiency and control costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
