Shares of blue-chip non-banking finance company Bajaj Finance Ltd tumbled nearly 7% in early trade on Tuesday, November 11, as investor sentiment turned cautious despite the firm posting robust double-digit profit growth for the July–September quarter. The sell-off followed management’s decision to trim its growth guidance and concerns over rising stress in the MSME (Micro, Small, and Medium Enterprises) loan segment.
Q2 Results Overview
For the quarter ended September 30, 2025, Bajaj Finance reported a 23% year-on-year rise in consolidated net profit to ₹4,948 crore, compared to the same period last year. The company’s net interest income (NII) jumped 22% to ₹10,785 crore, up from ₹8,838 crore in the corresponding quarter of FY25, reflecting continued strong lending activity.
However, the company’s asset quality showed signs of deterioration. Gross non-performing assets (NPAs) rose to 1.24% of total loans as of September 2025, compared to 1.06% a year earlier. Net NPAs increased to 0.6%, up from 0.46% in the same period last fiscal, indicating pressure in certain loan categories.
Guidance Cut and MSME Stress
Bajaj Finance reduced its credit growth guidance for FY26 to 22–23%, down from the earlier 24–25%, citing emerging stress in its MSME and two-wheeler lending portfolios. The management said the company has chosen a more “balanced and prudent” approach to asset expansion for the rest of the fiscal year.
Additionally, the firm expects net interest margins (NIMs) to remain flat going forward, as cost efficiencies will be passed on to customers. The company maintained its projections for fee income growth of 13–15% and credit costs in the range of 1.85–1.95% for FY26E.
Brokerage Views: Mixed Sentiment Prevails
Brokerages maintained a cautious stance on the stock following the revised guidance.
JM Financial lowered its earnings per share (EPS) estimates by 2–3% for FY26/27E, factoring in the moderated growth outlook. It rolled forward its valuation to FY28E, assigning a target price of ₹1,140 (earlier ₹1,060) and downgraded the stock from ‘BUY’ to ‘ADD’, valuing it at 4.7x Sep-27E book value and 24x earnings per share.
Meanwhile, Motilal Oswal Financial Services (MOSL) described the second quarter as “mixed,” noting that the stock trades at a premium valuation of ~5x FY27E price-to-book value (P/BV) and ~26x FY27E price-to-earnings (P/E). Despite projecting a 25% CAGR in profit after tax (PAT) and strong RoA/RoE of 4.2%/22% by FY28E, MOSL said upside potential remains limited in the near term. The brokerage maintained a ‘Neutral’ rating with a target price of ₹1,160, based on 4.8x Sep-27E BVPS.
Outlook
While Bajaj Finance continues to deliver solid profitability, rising NPA levels and the conservative growth outlook have tempered market enthusiasm. Analysts suggest that although the company’s fundamentals remain strong, valuation concerns and near-term growth headwinds could keep the stock under pressure in the short run.