Detailed Narrative
Robust Q4 FY26 Financial Performance
Bajaj Finance reported a strong Q4 FY26, with Assets Under Management (AUM) growing 22.4% year-on-year to reach INR 510,000 crores, surpassing the INR 5 lakh crore milestone. Profit After Tax (PAT) for the quarter increased by 26.7% year-on-year. The company booked 12.9 million loans and added 3.93 million new customers, expanding its total customer franchise to 119.3 million as of March FY26.
Asset Quality and Provisioning Strategy
The company maintained healthy asset quality with a Gross Non-Performing Asset (GNPA) ratio of 1.01% and a Net Non-Performing Asset (NNPA) ratio of 41 basis points. The provision coverage ratio improved to 60% from 54% in the prior year. An additional ECL provision of INR 142 crores was made, and the loan loss to average AR, under a revised reporting methodology, stood at 1.65%, which is expected to trend down in FY27.
Accelerated AI Transformation (FinAl)
Bajaj Finance is aggressively pursuing its FinAl transformation, with 203 dedicated AI personnel, projected to expand to 363 by June '27. This initiative aims to integrate AI across all aspects of the business, including customer engagement, sales, service, and operations. Key milestones include 100% AI BOT interface for customer engagement and AI BOT integration into all communications by June '26, expected to drive significant efficiency gains and enhance customer experience.
Segmental Growth and Outlook
The gold loan portfolio demonstrated exceptional growth of 115% in FY26, now contributing 3.5% to the overall AUM, with expectations to exceed 5% by FY27. The MSME segment, which grew a muted 6% in FY26 due to proactive risk actions, is anticipated to return to double-digit growth between Q2 and Q3 of FY27. The captive 2-wheeler and 3-wheeler business, currently less than 1% of AUM, is expected to wind down to under INR 1,500 crores by September '26, which will further improve asset quality.
FY27 Guidance and Strategic Vision
For FY27, the company guides for 20-24% AUM growth and 15-17 million new customer additions, contingent on stable geopolitical and macroeconomic conditions. Marginal NIM moderation is expected, while Opex to NTI is projected to improve by 25-40 basis points. The company aims for an ROA of 4.4-4.6% and an ROE of 19-20%, with credit costs expected to trend down to 145-160 bps. The long-term ambition is to grow at twice the system rate to become a top 5-6 financial services lender in India within 5-7 years.
Shareholder Returns and Operational Efficiency
The Board recommended a final dividend of INR 6 per equity share for FY26, consistent with previous years. Operational efficiency saw an improvement in Opex to NTI by 10 basis points year-on-year (using the old metric), reaching 33.2%. The cost of funds improved by 4 basis points in Q4 to 7.41%, and the deposit book grew to INR 68,533 crores, contributing 16% to consolidated borrowings.