Bajaj Finance Q2 FY26: PAT up 22%, NPAs rise

Stock opens weak after results and guidance cut

Bajaj Finance shares started the week cautiously after the lender reported its September-quarter numbers. The immediate concern for investors was not the headline growth, but the softer outlook on FY26 loan growth. In early trade on Tuesday, the stock fell 6.97% to ₹1,009.75 around 9:39 am. It later ended at ₹1,009.1 on the NSE, down 7% from the previous close, after slipping below ₹1,000 intraday. The reaction came even as the company posted steady year-on-year profit growth. The market focus shifted quickly to management commentary on stress pockets and the trimmed guidance. Bajaj Finserv, the group’s associate, also fell 5.9% to ₹1,992.9 at close.

What the September quarter showed at a glance

Bajaj Finance reported Q2 FY26 performance for the quarter ended September 30, 2025. Consolidated profit growth was strong, but some reported figures differed across market summaries. One reported consolidated net profit at ₹4,948 crore, up 23% year-on-year. Another widely cited figure put consolidated net profit (PAT attributable to owners) at ₹4,875 crore, up 22% year-on-year from ₹4,000 crore. The ₹4,875 crore PAT was slightly below the Street estimate of ₹4,969 crore. Net interest income was reported at ₹10,785 crore, up 22% from ₹8,838 crore. Investors also tracked a rise in non-performing assets and higher credit costs during the quarter.

Core income lines: NII, total income, operating profit

Net interest income (NII) rose 22% to ₹10,785 crore in Q2 FY26 from ₹8,838 crore in Q2 FY25. Net total income increased 20% to ₹13,170 crore, compared with ₹10,946 crore a year ago. Pre-provisioning operating profit (PPOP) rose 21% year-on-year to ₹8,874 crore from ₹7,307 crore. These numbers pointed to strong operating leverage despite a more cautious stance on growth going ahead. The market also noted an NII estimate miss in one summary: NII expected at ₹10,955 crore versus actual ₹10,785 crore. A separate snippet mentioned revenue from operations at ₹20,179 crore, up 18% from ₹17,091 crore in Q2 FY25. Another snippet cited revenue from operations at ₹17,090 crore, up 28% from ₹13,382 crore, highlighting that multiple reports were in circulation.

Guidance reset: slower AUM growth becomes the headline

Management lowered its FY26 AUM growth guidance to 22-23% from 24-25%. The moderation was linked primarily to the MSME and two-wheeler lending segments, where stress was flagged as emerging. One market commentary also referred to pressure from captive two- and three-wheeler portfolios. Alongside the growth reset, management guided for flat net interest margins (NIMs) going forward, with cost benefits intended to be passed on to customers. Fee income growth guidance was maintained at 13%-15%. Credit cost guidance for FY26 was stated at 1.85%-1.95%. The revised outlook, more than the reported earnings, shaped the stock’s sharp one-day decline.

Asset quality and credit costs move into focus

Gross NPA was reported at 1.24%, rising from 1.06% a year earlier. Another update pegged gross NPAs at 1.24% versus 1.03% in the previous quarter, indicating sequential deterioration as well. Net NPA increased to 0.6% from 0.46% last year. In market commentary, the 1.24% gross NPA was described as around a 10-quarter high. A separate note highlighted very high credit costs at 2.02% for the quarter. Against this backdrop, the company’s FY26 credit cost guidance of 1.85%-1.95% became a key reference point for investors assessing whether Q2 was a peak. The combination of rising NPAs and elevated credit costs contributed to the cautious tone.

Loan book scale and customer additions

Assets under management (AUM) grew 24% year-on-year to ₹462,000 crore (₹4.62 lakh crore). The customer base was reported at 110.6 million, with 4.1 million new additions during the quarter. New loan bookings were cited at 12.17 million, up 26% year-on-year. These operating indicators supported the view that the franchise continues to expand, even as certain pockets show higher stress. Growth was also described as healthy in gold loans and loans against property in one takeaway list. Still, the market’s reaction suggested that investors are prioritising the quality of growth and forward guidance. That makes the next few quarters of asset-quality trend important for sentiment.

Key numbers investors tracked (Q2 FY26)

What brokerages said: optimistic but not unanimous

Morgan Stanley maintained an Overweight rating and revised its target price to ₹1,195 from ₹1,150. It flagged that trimmed FY26 AUM guidance and stable NIMs could disappoint, but pointed to likely declines in credit costs and cost efficiencies as support. HSBC reiterated a Buy call and raised its target to ₹1,200, citing Q2 EPS in line with estimates and stable RoA and RoE supported by better cost-to-income ratios. Jefferies kept a Buy rating with a target of ₹1,270, noting profit growth and 24% AUM growth while acknowledging the guidance cut. CLSA retained an Outperform call with a ₹1,200 target and highlighted 24% AUM growth led by secured loans, with credit cost guidance at 1.85%-1.95%. Motilal Oswal described the quarter as mixed with in-line earnings, maintained a Neutral rating, and set a target price of ₹1,160. Bernstein maintained an Underperform rating with a target price of ₹640, citing rising NPAs, elevated credit costs, and margin pressure.

Why the market reaction matters for the NBFC space

The stock’s near-7% fall showed how quickly guidance and asset-quality signals can outweigh strong headline growth. For investors, the key issue is whether stress in MSME and two-wheeler related books stays contained and whether credit costs normalise towards management’s FY26 band. The market commentary also suggested broader pressure being sensed in the NBFC sector, with the sector leader’s move influencing sentiment. At the same time, the company’s scale, 24% AUM growth, and expanding customer base reinforced the franchise strength highlighted by several bullish brokerages. In the near term, the trimmed growth outlook resets expectations for FY26 compounding. It also increases the importance of sequential NPA and credit cost trends in the next results cycle. With the stock reacting sharply, near-term volatility is likely to remain tied to data points rather than narrative.

What to watch in the next quarter

Investors are likely to focus on whether gross and net NPAs stabilise from the 1.24% and 0.6% levels cited for Q2. The trajectory of credit costs from the 2.02% figure mentioned for the quarter will also be closely watched versus the 1.85%-1.95% FY26 guidance. Updates on MSME and two-wheeler portfolios will be important, given that these were identified as stress areas behind the guidance cut. The company’s stance on flat NIMs and its ability to sustain fee income growth of 13%-15% will shape earnings quality. Broker targets ranging from ₹640 to ₹1,270 show a wide dispersion tied to valuation comfort and risk assessment. The next quarter’s commentary on AUM momentum and asset quality will likely set the direction after the sharp post-results correction.