Bajaj Finance Reports Strong Q1 FY26 Results: AUM Up 25%, PAT Rises 22%
This announcement provides comprehensive quarterly financial results, key operational metrics, and future guidance, which are critical for investor decision-making. Details on asset quality, segment-specific performance challenges, and management's strategic responses (including the return of the MD) directly influence the company's valuation and outlook, making it a high-impact event.
The company reported strong growth in AUM (25%) and PAT (22%), expanded its customer base significantly, and saw an improvement in its cost of funds. Management expressed confidence in future NIM expansion and outlined strategic initiatives like FinAI transformation. While credit costs remain elevated in specific segments, the company is actively taking corrective measures and expects improvement in the latter half of the year.
Bajaj Finance Limited reported a strong start to FY26 with robust growth in key financial metrics and progress on its FinAI transformation strategy, despite elevated credit costs in certain segments.
* Financial Performance (Q1 FY26): * Assets Under Management (AUM) grew by ₹24,789 crore to ₹4,41,450 crore, marking a 25% year-on-year increase. * The company booked a record 13.5 million loans and added 4.7 million new customers, expanding its customer franchise to 106.5 million. * Profit Before Tax (PBT) grew 21%, and Profit After Tax (PAT) increased by 22%. * Return on Equity (ROE) stood at 19%, and Net Non-Performing Assets (NNPA) was 0.5%. * Operating expenses to total income came in at 32.7%. * Cost of funds improved by 20 basis points sequentially to 7.79% in Q1 FY26. The estimated cost of funds for FY26 is 7.60% to 7.65%. * The liquidity buffer as of 30 June 2025, was just below ₹15,000 crore.
* Asset Quality and Credit Costs: * Credit costs remained elevated at 2.02% of average AUM. * The 2- and 3-wheeler business, which is winding down, continued to see elevated credit costs, though this book is expected to reduce significantly by March 2026. * The MSME business showed sudden strains, with 13 out of 17 tracked industries exhibiting slowdowns and 3 showing contraction. The company has taken actions to prune this business and offered restructuring options to standard accounts totaling ₹219 crore to mitigate short-term cash flow issues. * The company is actively working to reduce the contribution of customers with multiple loans, a key driver of loan losses. * Gross NPA (GNPA) and NNPA stood at 1.03% and 0.5% respectively.
* Strategic & Operational Updates: * The FinAI transformation strategy has begun to go live across the company. * Geographic footprint expanded to 4,192 locations, with gold loan branches at 1,254 and MFI branches at 337. * Rajeev Jain has returned as Vice Chairman and Managing Director until March 2028 to ensure continuity, following the resignation of Anup. A detailed succession planning process will be presented to the Board/NRC within the next six months.
* Subsidiary Performance: * Bajaj Housing Finance Limited (BHFL): Reported a balanced quarter with PAT growth of 21% and ROA of 2.3%. It faces intense competitive activity leading to pressure on volumes and attrition. * Bajaj Financial Securities Limited (BFSL): Achieved an AUM of ₹6,100 crore, PAT grew 37%, and added 77,000 customers.
* Outlook and Guidance: * The company anticipates a NIM expansion of approximately 10 basis points by the end of FY26, a positive revision from earlier flat guidance. * Fee income growth is guided at 13% to 15% for FY26. * The credit cost guardrail for FY26 is set at 185-195 basis points, with a decline expected from Q3 onwards. * The MSME business is expected to see slower growth in the current year due to corrective actions. The company also noted political risk in Karnataka which has led to a 40-50% reduction in business in that state for certain rural segments.
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Bajaj Finance Limited filed this with the NSE as a statutory disclosure, categorised under results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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