Bajaj Finance Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Bajaj Finance reported a strong Q2 FY26 with AUM growing 24% to INR 462,261 crores, driven by secular growth across businesses and contributions from new segments. Despite a moderated MSME growth and elevated credit costs, the company maintained steady ROA and ROE. Management highlighted significant progress in its FinAI transformation and a successful festive season, while revising full-year AUM growth guidance to a more prudent 22-23%.

Highlights

  • Assets Under Management (AUM) grew 24% to INR 462,261 crores.

  • New lines of businesses contributed 3% to overall AUM growth in Q2.

  • MSME business growth moderated to 18% as part of a risk-first approach.

  • Customer franchise expanded to 110.64 million, adding 4.13 million new customers in Q2.

  • Cost of funds improved by 27 basis points in Q2, reaching 7.52%.

  • Opex to Net Total Income (NTI) improved to 32.6% from 33.2% in Q2 last year.

  • Loan loss to average AUF came in at 2.05% compared to 2.02% in Q1.

  • Festive period disbursements totaled 7.4 million loans, a 26% increase year-on-year, adding 2.3 million new customers.

What they filed

Q1 FY27: revenue up 18.6%, net profit up 29.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue14,488 15,371 15,638 16,697 17,184 +19%17,870 +16%18,430 +18%19,802 +19%
Net profit5,614 3,706 3,940 4,133 4,251 −24%4,581 +24%4,840 +23%5,346 +29%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Customer Growth

  • New Customers Added Customer Growth · FY26 · High confidence 16-17 million
    We now expect to add 16 to 17 million new customers in FY '26.

    — Rajeev Jain

AUM Growth

  • AUM Growth Rate AUM Growth · FY26 · High confidence 22-23%

    Previously 24-25% → 22-23%

    So we now would circle up our guidance to 22-23% growth for full year versus 24-25% that we had pencilled in January'25, when we talked about.

    — Rajeev Jain

Cost of Funds

  • Cost of Funds Percentage Cost of Funds · FY26 · High confidence 7.5% to 7.55%
    For FY '26, we expect cost of funds to be in the region of overall full year to be between 7.5% to 7.55%.

    — Rajeev Jain

Credit Cost

  • Full Year Credit Cost to AUF Credit Cost · FY26 · High confidence 1.95%

    Previously 1.85% to 1.95% → 1.95%

    We expect full year credit cost to be at the upper end of guided range of 1.85% to 1.95% now.

    — Rajeev Jain

  • Credit Cost to AUF Credit Cost · FY27 · Medium confidence significant improvements
    and we expect significant improvements in credit costs for FY'27.

    — Rajeev Jain

MSME Business Growth

  • MSME Volume Growth MSME Business Growth · Current full fiscal (FY26) · High confidence 10-12%
    We now expect MSME business to grow in the current full fiscal by 10-12% only.

    — Rajeev Jain

AI Adoption

  • AI for Loan Quality Checks AI Adoption · eventually · Medium confidence 85-90%
    This number is at 42%, eventually has to go to 85-90%.

    — Rajeev Jain

  • Communication via BOT AI Adoption · by March '26 · High confidence All communication
    We foresee that all our communication by March '26 would have a BOT in it, depending on the affinity product that we principally see.

    — Rajeev Jain

Gold Loan Business

  • Gold Loan AUM Gold Loan Business · by March '27 · High confidence INR 27,000 crores to INR 30,000 crores
    It should be between INR 27,000 crores to INR 30,000 crores business by March '27.

    — Rajeev Jain

Branch Expansion

  • Gold Loan Branches Branch Expansion · now till March '27 · High confidence 900 more branches
    You will see from now till March '27, virtually 900 more branches coming through.

    — Rajeev Jain

Fee and Other Income

  • Growth Rate Fee and Other Income · Current year (FY26) · High confidence 13% to 15%
    All put together, we will see 13% to 15% growth in the current year.

    — Sandeep Jain

2 min read

Detailed narrative

Bajaj Finance reported a robust Q2 FY26, with Assets Under Management (AUM) growing by 24% year-on-year to INR 462,261 crores. This growth was broad-based, with new lines of businesses contributing 3% to the overall AUM expansion. The company's customer franchise significantly expanded, crossing 110 million to reach 110.64 million, with 4.13 million new customers added in the quarter alone. Despite this strong performance, the full-year AUM growth guidance for FY26 was prudently revised downwards to 22-23% from an earlier assessment of 24-25%, primarily due to risk actions in the MSME business and revised assessments from Bajaj Housing Finance Limited (BHFL).

Profitability metrics remained steady, with ROA and ROE maintained. The cost of funds improved by 27 basis points in Q2, settling at 7.52%, and is expected to remain in the 7.5% to 7.55% range for the full year FY26. Net Interest Margin (NIM) remained flat compared to Q1. Operating efficiencies also saw improvement, with the Opex to NTI ratio improving to 32.6% from 33.2% in the prior year's Q2. However, credit costs remained elevated, with loan loss to average AUF at 2.05% (up from 2.02% in Q1), leading to an expectation that full-year credit cost will be at the upper end of the guided range of 1.85% to 1.95%.

Management highlighted specific actions taken to address credit quality, particularly in the MSME segment, where unsecured volumes were cut by 25%, leading to an expected growth of only 10-12% for FY26. The captive 2-wheeler and 3-wheeler finance business, which contributes 1.5% of AUM but 9% of loan losses, is being phased out, expected to significantly improve asset quality from FY27. Subsidiaries BHFL and BFSL also showed strong performance, with BHFL's AUM growing 24% and PAT 18%, and BFSL's AUM growing 40% with profits up 27%.

A key strategic focus remains the FinAI transformation, with significant progress reported. 442 AI voice bots are live, contributing INR 2,000 crores in origination in Q2. The company aims for 85-90% of loan application quality checks to be AI-performed eventually, and all communication to incorporate BOTs by March '26. The festive season was exceptionally strong, with 7.4 million loans disbursed (up 26% YoY) and 2.3 million new customers added. The gold loan business is targeted to reach INR 27,000-30,000 crores by March '27, supported by an expansion of 900 new branches.

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