💰 Financial Performance

Revenue Growth by Segment

Consolidated Assets Under Management (AUM) grew 24% YoY to INR 462,261 Cr in Q2 FY26. MSME growth moderated to 18% due to a risk-first approach. New business lines (gold loans, new car loans, CV, and tractors) contributed 3% to overall AUM growth. Subsidiary BHFL saw AUM growth of 24%, while BFSL AUM grew by 40%. Net Interest Income (NII) for FY25 increased by 23% to INR 36,393 Cr.

Geographic Revenue Split

Not disclosed in available documents, though the company operates as an 'omnipresent' financial services provider across India with plans to add 900 more branches by March 2027.

Profitability Margins

Net Total Income (NTI) grew 24% to INR 44,954 Cr in FY25. Profit Before Tax (PBT) increased 14% to INR 22,080 Cr. Return on Assets (ROA) was stable at ~4.3% (annualized) for Q1 FY26 compared to 4.0% a year prior. Return on Equity (ROE) remained steady as per Q2 FY26 management commentary.

EBITDA Margin

Pre-impairment operating profit increased by 25% to INR 30,028 Cr in FY25. Opex to Net Total Income (NTI) stood at 33%, reflecting efficient cost management despite a 21% increase in total operating expenses to INR 14,926 Cr.

Capital Expenditure

Not disclosed in absolute INR Cr for physical infrastructure, but the company is investing heavily in 'FinAI' transformation over a 15-18 month horizon to become a future-ready AI financial services company.

Credit Rating & Borrowing

Maintains a strong credit profile with CRISIL Ratings reflecting its position as a large retail NBFC. Consolidated average cost of funds for FY25 was 7.97%, with an exit cost of 7.87% as of March 31, 2025. Management lowered cost of fund guidance by 5 basis points for the full year.

⚙️ Operational Drivers

Raw Materials

Capital/Debt represents 100% of the 'raw material' for lending operations. Borrowings stood at INR 361,249 Cr as of March 31, 2025.

Import Sources

Sources include domestic markets and international markets. The company raised approximately USD 1 billion in fully hedged External Commercial Borrowings (ECB) as term loans in FY25.

Key Suppliers

Multiple domestic and international banks for term loans and ECBs, and retail/institutional investors for NCDs and deposits.

Capacity Expansion

Current branch network is expanding with 900 more branches planned by March 2027. 500 existing branches are being converted into gold loan branches to pivot from cost centers to profit centers.

Raw Material Costs

Cost of funds (interest expense) is the primary cost. Average cost was 7.97% in FY25. Management aims to maintain NIMs by passing incremental 27 bps benefits to customers.

Manufacturing Efficiency

Operational efficiency is measured by Opex to NTI, which was 33% in FY25. FinAI deployment is expected to render branch staffing surplus, allowing reallocation to higher-value tasks.

Logistics & Distribution

Distribution is handled via the Bajaj Finserv App (70.57 million users) and physical branches. Distribution costs are captured within the 33% Opex to NTI ratio.

📈 Strategic Growth

Expected Growth Rate

24-26%

Growth Strategy

Achieved through a 'FinAI' transformation to enhance customer experience, aggressive expansion into gold loans (converting 500 branches), and scaling new lines like new car loans, CV, and tractor financing which grew 3% in Q2. The company aims for 200 million consumers and a 3-4% share of total credit in India.

Products & Services

Consumer durable loans, personal loans, MSME loans, gold loans, new and used car finance, commercial lending, mortgages (via BHFL), and securities trading (via BFSL).

Brand Portfolio

Bajaj Finance, Bajaj Finserv, Bajaj Housing Finance Limited (BHFL), Bajaj Financial Securities Limited (BFSL).

New Products/Services

Gold loans, new car loans, CV, and tractor loans are scaling up. FinAI transformation is expected to launch new metrics and services within 15-18 months.

Market Expansion

Adding 900 branches by March 2027 and deepening penetration in rural B2C and MFI segments, which were recently upgraded from 'yellow' to 'green' risk status.

Market Share & Ranking

Aims to be amongst the top 5 players in every business line and a top 20 most profitable company in India. Currently one of the largest retail-focused NBFCs.

Strategic Alliances

Strategic importance to parent Bajaj Finserv Ltd and ultimate holding company Bajaj Holdings and Investments Ltd (BHIL) provides financial and operational synergies.

🌍 External Factors

Industry Trends

Shift toward 'omnipresent' financial services (App, Web, Social). The industry is evolving toward AI-first models; BFL is positioning itself to be future-ready within 18 months to dominate 4-5% of retail credit.

Competitive Landscape

Faces 'heightened competitive intensity' in the mortgage segment (BHFL) and portfolio attrition, requiring aggressive customer acquisition (94,000 new customers in BFSL in Q2).

Competitive Moat

Moat built on a massive customer franchise (101.82M), data analytics for risk management, and a diversified product suite. Sustainability is driven by the 'risk-first' culture and low NPA levels (0.96% Gross).

Macro Economic Sensitivity

Earnings are susceptible to volatility in credit costs during macroeconomic stress. FY25 impairment increased 72% YoY, reflecting sensitivity to economic cycles.

Consumer Behavior

Increasing adoption of digital platforms, with 70.57 million customers now on the Bajaj Finserv App.

Geopolitical Risks

Not disclosed as a primary risk, though global interest rate trends affect the cost of ECB borrowings.

⚖️ Regulatory & Governance

Industry Regulations

Subject to RBI regulations for NBFCs. The captive 2-wheeler and 3-wheeler finance business is being phased out as per plan to strengthen asset quality trends from FY27 onwards.

Taxation Policy Impact

Not specifically detailed, but the company reported a PBT of INR 22,080 Cr for FY25.

⚠️ Risk Analysis

Key Uncertainties

Credit cost volatility is the primary uncertainty, with FY25 impairment rising 72%. Potential impact is a reduction in PAT growth if credit costs exceed the 1.95% guided upper limit.

Geographic Concentration Risk

Not disclosed, but the company is expanding its physical footprint by 900 branches to reduce concentration.

Third Party Dependencies

Reducing dependency on Third Party Loans (3PL) to improve portfolio performance; urban 3PL cut from 13% to 4.8%.

Technology Obsolescence Risk

Mitigated by the FinAI transformation project, aiming to prevent obsolescence by becoming an AI-first financial entity within 15-18 months.

Credit & Counterparty Risk

Maintains industry-leading asset quality with Net NPA at 0.44%. Adjusted networth to NNPA ratio is healthy at 47 times, providing a strong buffer against losses.