Synopsis: Bajaj Finance’s Q1FY26 net profit increased 21.8% YoY and 4.81% QoQ, driven by robust loan growth and increased fee income; however, brokerages are cautious to mix as credit costs increase and MSME stress begins to affect growth prospects.
The shares of one of the leading Non Banking Financial Companies in India are in focus today, after declaring financial results for Q1FY26, where net profits grew by 21.8 percent YoY and 4.81 percent QoQ, check it out.
With a market capitalization of Rs. 5,70,223 crores, the shares of Bajaj Finance Ltd were trading at Rs. 918, down by 4.32 percent from its previous day close of Rs. 958.95 per equity share.
Q1 Update
Bajaj Finance Ltd reported Rs. 19,524 crores in revenue for the first quarter of FY26, a moderate increase of 21.26 percent over the Rs. 16,100 crores for the same period in FY25. However, from Rs. 18,457 crores in Q4 FY25, revenue increased by about 5.8 percent sequentially.
Net interest income for Q1FY26 was Rs. 10,277 crores, up by 22 percent from Rs. 8,365 crores in Q1FY25. Operating profit grew by 22 percent from Rs. 6,947 crores to Rs. 8,487 crores Year over Year. AUM was Rs. 4,41,450 crores grew by 25 percent as compared to Rs. 3,54,192 crores in Q1FY25.
The consolidated net profit for the first quarter of FY26 was Rs. 4,765 crores, which was 4.81 percent higher than the Rs. 4,546 crores reported in the previous quarter and 21.80 percent higher year over year than the Rs. 3,912 crores in Q1 FY25. Profit growth was also reflected in earnings per share (EPS), which increased to approximately Rs. 7.56 in Q1 FY26 from Rs. 6.32 in Q1 FY25 and Rs. 7.21 in Q4 FY25.
In Q1FY26, the Opex to Net total income ratio was 32.7 percent as against 33.3 percent in Q1FY25, whereas ROE stands at 19 percent compared to 19.9 percent in Q1FY25 and ROA of 4.5 percent as against 4.6 percent in Q1FY25. The Gross NPA stood at 1.03 percent compared to 0.86 percent in Q1FY25, and Net NPA at 0.5 percent as against 0.38 percent in Q1FY25.
About the Company
The country’s largest private-sector NBFC, Bajaj Finance Limited (BFL), offers a broad range of financial products, including mutual funds, loans, deposits, and insurance, through both online and offline channels. BFL caters to both urban and rural markets with a diverse lending portfolio that includes retail, SME, and commercial segments. The business is transforming quickly into a FINAI (Finance + AI) organization in order to provide personalized customer experiences, boost operational effectiveness, and promote inclusive, sustainable, and long-term growth.
Analyst outlook
With a target of Rs. 800, Macquarie continued to maintain an Underperform rating. It stated that although lower provisions caused profits to meet expectations, increased stress in the SME sector resulted in higher credit costs. They think the market hasn’t fully accounted for the effects of rising risks and lower growth guidance.
Citi has set a price target of Rs. 983 and has a Neutral rating. Although it raised concerns about MSME stress, it claimed that cost control and larger margins offer some assistance. A leadership transition is anticipated by March 2028, and a plan for the CEO’s succession is imminent. The outlook for earnings is largely unchanged.
Jefferies increased the target price to Rs. 1,100 and maintained a Buy rating. Despite some pressure on MSME loans, the company’s growth is still robust. The cost of credit is increasing and might continue to do so for several quarters. Estimates of profits were somewhat lowered, and a plan for the CEO’s succession is anticipated in six months.
UBS maintained its Sell rating for Bajaj Finance but raised its price target from Rs. 720 to Rs. 750. UBS is worried about growing credit costs and slower growth in FY26, even though the company exceeded profit projections due to higher fee income. Although MSME loans appear to be under stress, margins may be supported by reduced funding costs. For the time being, any concerns about leadership are avoided because the CEO succession is not anticipated until 2028.
Written by: Akshay Sanghavi
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