Synopsis: BNP Paribas continued to keep Bajaj Finance as its top NBFC pick despite the AUM growth guidance cut by the management. BNP Paribas believed that the recent correction was a temporary halt and should rather be seen as a long-term compounding opportunity.
The shares of the largest Non-Banking Financial Company (NBFC) are in focus after one of the analysts of BNP Paribas has given their viewpoint on the company’s recent financial performance in this quarter. In this article, we will dive more into the details.
With a market capitalization of Rs 6,39,671 crore, the shares of Bajaj Finance Ltd are currently trading at Rs 1,028.75 per share, representing a 1 percent increase from its previous day’s closing price of Rs 1,018.20 per share. Over the past five years, the stock has delivered a return of 118 percent, outperforming NIFTY 50’s return of 102 percent.
Analyst Comments
BNP Paribas is betting big on Bajaj Finance, citing that the recent correction is only for a short period of time and actually presents a long-term buying opportunity. The brokerage has kept the long-term story intact even after the company slightly lowered its full-year loan growth guidance from 24-25 percent to 22-23 percent.
BNP’s analyst Shantanu Chakrabarty believes that Bajaj Finance is moving from a “sharp re-rating story” to a steady “compounding story,” which would be backed by rural demand improving and a strong recovery being visible in October.
Chakrabarty points out that the slowdown in the SME segment and some stress in MSME loans caused short-term market concerns, but these matters do not affect the company’s fundamentals. According to him, the company still has considerable growth potential, and the latter part of FY26, with a lower base, could lead to a much stronger FY27, and for these reasons, it remains the analyst’s top pick in the NBFC segment.
BNP Paribas also stayed upbeat about Bajaj Finance as it considers the top-tier private banks as potential investments. In particular, the brokerage has recently upgraded Axis Bank following its strongest performance in the last six to seven quarters. Nevertheless, Chakrabarty emphasizes that Bajaj Finance is still the most prominent NBFC.
Q2 Highlights
Bajaj Finance reported a net interest income of Rs 10,785 crore in Q2 FY26, a growth of 22 percent from its Q2 FY25 net interest income of Rs 8,838 crore. Coming to its profitability, the bank reported a net profit growth of 23 percent to Rs 4,948 crore in Q2 FY26 as compared to Rs 4,014 crore in Q2 FY25. Assets Under Management (AUM) also grew by a robust 24 percent, reaching Rs 4,62,261 crore in Q2 FY26 as compared to Rs 3,73,924 crore in Q2 FY25.
Coming to its Asset Quality, Bajaj Finance reported a GNPA of 1.24 percent in Q2 FY26, which increased by 18 bps from 1.06 percent in Q2 FY25. Also, NNPA increased by 14 bps, reaching 0.60 percent in Q2 FY26 as compared to 0.46 percent the previous year, signifying strains in asset quality.
In conclusion, BNP Paribas is betting on Bajaj Finance as it views the recent decline as a temporary correction and is convinced that the company will continue to grow over the long term. The company can be seen as a steady compounding play mainly because of strong NII, profit, and AUM growth, better rural demand, and a good FY27 outlook, which is why BNP keeps it as its top NBFC pick.
Written by Satyajeet Mukherjee
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