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    Bajaj Finance Q1 FY27 earnings call

    BAJFINANCE
    Financial Services·4 Aug 2026
    Management Summary

    Bajaj Finance reported an excellent Q1 FY27, marked by record AUM growth of INR 37,000 crores, a 28% increase in profit, and an ROE of 20.4%. Customer additions were strong at 5 million, and asset quality showed significant improvement. The company continued its aggressive digital and AI transformation, alongside strategic branch expansion in gold loan and MFI segments, while prudently building macroeconomic provisions.

    Highlights

    5

    • AUM increased by a record INR 37,000 crores in Q1 FY27, demonstrating strong volume momentum.

    • Profit growth was robust at 28% year-on-year, leading to an ROE of 20.4% and ROA of 4.7%.

    • Added 5 million new customers, indicating strong customer acquisition.

    • Credit quality improved with loan loss to average AUF at 1.54% (down from 1.87% in the same period last year), and GNPA/NNPA at 0.96%/0.39% respectively.

    • Gold loan business showed exceptional growth of 112% and is expanding its branch network to 2,700-2,800 by year-end.

    Concerns

    3

    • An additional management and macroeconomic provision of INR 296 crores was recognized due to geopolitical uncertainties and monsoon concerns.

    • Opex to NTI marginally increased to 33.4% compared to last year, primarily due to accelerated investments in gold loan and MFI branch expansion, and the impact of the new labor code.

    • MSME segment growth was modest at 2% due to pruning business, though expected to recover by Q3 FY27.

    Key financials

    Single quarter

    11 metrics
    1. 01AUM Added (QoQ)₹37,000 Cr
    2. 02Profit Growth28%+28.0%YoY
    3. 03ROE20.4%
    4. 04ROA4.7%
    5. 05Opex to NTI33.4%

    Segment breakdown

    Gold Loan Business
    112% Growth4% % of AUM
    Rural Consumer Finance
    49% Growth
    Urban Consumer Finance
    38% Growth
    MSME
    2% Growth
    Bajaj Housing Finance Limited (BHFL)
    24% AUM Growth33% Disbursements Growth19.6% Opex to NTI23% PAT & PBT Growth12.5% ROE29.0% GNPA12% NNPA
    Bajaj Financial Securities Limited (BFSL)
    22% Profit Growth
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    The company maintains a Capital Adequacy Ratio (CAR) of 21% and has a leverage of 4.9x. Management stated they do not foresee raising capital at this juncture.

    Guidance & targets

    8
    CategoryTargetPriority
    Opex to NTI
    Opex to NTI Improvement
    25 to 40 basis points
    		High
    Gold Loan AUM
    Gold Loan AUM
    INR 29,000 crores to INR 31,000 crores
    		High
    Gold Loan Branches
    Number of Gold Loan Branches
    2,700 to 2,800 (maybe 3,000)
    		Medium
    Digital Platform Business Volume
    Digital Platform Business Volume
    INR 50,000 crores
    		High
    Overall Volume (Customer Centricity, AI, Digital)
    Overall Business Volume
    INR 100,000 crores
    		High
    NIM
    NIM Moderation
    10 - 15 basis points
    		Medium
    Branch Expansion
    New Branches Added Annually
    170 to 250 branches
    		High
    BHFL Stake Dilution
    BHFL Stake
    75%
    		High

    What to watch in Q2 FY27

    5

    AUM Growth Guidance Revision

    next quarter
    CurrentStrong Q1 performance, but guidance unchanged
    TargetUpward revision of FY27 AUM growth guidance

    Why it matters

    Management indicated they would wait one more quarter to sustain momentum before revising guidance, which could signal higher growth expectations.

    If you look at quarter 1, logically, but I would wait for second quarter, whether it's top line, which is AUM or PBT growth or ROA or ROE, it does seem we are much better than the guidance that we gave in March. Abhijit, I would say to all investors, wait for one more quarter, and we sustain it, then we know. We are in a way to revise.

    Risks & concerns

    3
    RiskSeverity

    Geopolitical Tensions and Monsoon Uncertainty

    An additional macroeconomic provision of INR 296 crores was made due to geopolitical events and uncertain monsoon, which could lead to inflationary pressures if not settled. — Management acknowledged

    medium

    VUCA World / Unforeseen Crises

    Management emphasized the need for balance sheet resilience due to living in a 'VUCA world' where the next crisis is unknown. — Management acknowledged

    medium

    Competitive Intensity in Lending

    Competitive intensity in personal loans and MSME segments is ongoing from multiple players (PSU banks, private banks, nonbanks), but the company relies on its franchise value and customer centricity. — Management acknowledged

    low

    Q&A highlights

    7

    “No, it's a fair question. It's only question I didn't cover. So, it's fair you're asking this. As they say, one solo doesn't make a summer, we'll wait for one more quarter. I think we see continued momentum. We are a growth-oriented business. We are seeing opportunities. We got to grow. All engines are firing for the firm, even MSME should be back.”

    Analyst questioned if the strong Q1 performance would lead to an upward revision of FY27 AUM growth and credit cost guidance, but management preferred to wait another quarter before revising.

    asked by Abhijit Tibrewal

    3 min read7 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Bajaj Finance reported an 'excellent quarter' for Q1 FY27, achieving strong momentum across all metrics. The company added 5 million new customers and recorded a significant INR 37,000 crores increase in AUM. Profit after tax grew by 28%, with Return on Equity (ROE) crossing 20% to reach 20.4% and Return on Assets (ROA) at 4.7%. The Opex to NTI ratio stood at 33.4%, marginally higher than the previous year.

    02

    AUM and Customer Growth Drivers

    AUM growth was secular and broad-based, with the gold loan business being a standout performer, growing by 112% and now constituting 4% of total AUM. Rural and urban consumer finance segments grew by 49% and 38% respectively, with approximately 20% of this growth attributed to organic volume and 20% to SKU price increases. The MSME segment grew by 2%, with management expecting a return to stronger growth momentum by Q3 FY27.

    03

    Asset Quality and Provisions

    Credit quality remained strong, with loan loss to average AUF improving to 1.54% from 1.87% in the prior year. Excluding a macroeconomic provision of INR 296 crores, the loan loss to AUF would have been 1.31%. GNPA and NNPA were reported at 0.96% and 0.39% respectively, with a provision coverage of 60%. The company continues to maintain a robust balance sheet, making additional provisions as a measure of prudence against geopolitical and monsoon uncertainties.

    04

    Digital and AI Transformation

    Bajaj Finance is doubling down on its Fin AI transformation, expanding its AI unit to 400 people and adding 300 to its digital platform unit. The digital platform is targeted to deliver INR 50,000 crores of business this year, with an ambition to reach INR 100,000 crores next year. AI initiatives analyzed 45 million customer interactions, resulting in 4 lakh additional offers and INR 517 crores in disbursements. AI bots now handle 71% of DIY customer service volumes, and the company is developing custom AI models for B2B and B2C businesses.

    05

    Gold Loan and Branch Expansion Strategy

    The gold loan business, having cracked its strategy in November '23, is focused on network expansion and process excellence. The company is adding 110 new branches per month, aiming for 2,700-2,800 branches by year-end, with a capacity to generate INR 37,000-38,000 crores in AUM. Approximately 25% of the gold loan business is now sourced through the digital platform. Overall, the firm plans to add 170-250 branches annually for sustained growth.

    06

    Cost of Funds and Margin Outlook

    Net Interest Margins (NIMs) remained steady in Q1 FY27. The deposit book grew to INR 68,500 crores, representing 15% of the balance sheet. Management anticipates a moderation of 10-15 basis points in NIMs in the coming quarter, influenced by the incremental cost of funds and potential inflationary pressures from the West Asia crisis and monsoon performance. The company's strategy involves maintaining a longer liability maturity than asset maturity.

    07

    Capital Adequacy and Shareholder Returns

    The company reported a Capital Adequacy Ratio (CAR) of 21% and a leverage of 4.9x. Management stated they are comfortable with the current capital adequacy and do not foresee raising capital at this juncture. The first priority for capital actions would be the dilution of their stake in Bajaj Housing Finance Limited (BHFL) from 86.7% to 75%. A dividend was paid, contributing to an improvement in ROE.

    This is an AI-generated summary of a publicly available earnings call transcript.