Bajaj Finance Shares Slide 7% As NPA Concerns Mount; What Should Investors Do?

Bajaj Finance shares tumbled 6.9% to their day’s low of Rs 1,010.25 on the BSE on Tuesday, November 11, even as the company reported a 22% year-on-year (YoY) increase in consolidated net profit for the September

quarter (Q2FY26).

The sharp decline came amid concerns over rising non-performing loans (NPAs), elevated credit costs, and sustained margin pressures.

Q2FY26 Performance Highlights

The company’s consolidated profit after tax (PAT) rose to Rs 4,875 crore from Rs 4,000 crore in the same quarter last year, slightly below Street estimates of ₹4,969 crore. Net interest income (NII) grew 22% YoY to Rs 10,785 crore from Rs 8,838 crore, while net total income jumped 20% to Rs 13,170 crore. Pre-provisioning operating profit (PPOP) rose 21% to Rs 8,874 crore.

During the quarter, Bajaj Finance booked 1.22 crore new loans, a 26% increase from 97 lakh loans in Q2FY25. Its customer franchise expanded 20% to 11.06 crore as of September 30, 2025, from 9.21 crore a year ago, with 41.3 lakh new customers added during the quarter.

Asset Quality and Provisions

Loan losses and provisions rose 19% YoY to Rs 2,269 crore, up from Rs 1,909 crore in Q2FY25. The annualised loan losses and provisions to average assets under finance stood at 2.05%.
Gross and Net NPAs increased to 1.24% and 0.60%, respectively, versus 1.06% and 0.46% a year earlier. The provisioning coverage ratio on stage 3 assets stood at 52%.

Analyst Reactions

Morgan Stanley: Overweight | Target Price: Rs 1,195

Morgan Stanley maintained its Overweight rating on Bajaj Finance, raising the target price to Rs 1,195 (from Rs 1,150). The brokerage cut its FY26 AUM growth forecast to 22–23% (from 24–25%) and expects net interest margins (NIMs) to remain flat instead of expanding by 10 bps. The firm trimmed FY26 and FY27 EPS estimates by 1.5% and 1.1%, respectively, citing slightly below-estimate profit growth. Credit costs remained steady at around 195 bps, with stress formation at the lowest level in eight quarters. Morgan Stanley highlighted Bajaj Finance’s strong fundamentals, predicting over 25% EPS CAGR for FY25–27 and an ROE of 21% by FY27. It continues to see Bajaj Finance as the strongest large-cap financial and recommends buying on dips.

Bernstein: Underperform | Target Price: Rs 640

Bernstein retained its Underperform rating with a Rs 640 target price, flagging rising stress across loan segments despite a 24% YoY AUM growth and 23% PAT rise. Gross and Net NPA ratios increased to 1.24% and 0.60%, respectively, with incremental NPLs at 2%, suggesting building asset-quality pressure.

Loan losses, at 205 bps, exceeded guidance for the second straight quarter, prompting expectations of upward revisions in credit cost estimates. Growth in the MSME loan segment slowed to 18% YoY (from 29%), while unsecured MSME volumes fell 25%, reflecting a more cautious lending approach.

Though NIMs stayed stable aided by a 27 bps drop in funding costs and tight cost controls, operating expenses rose 18% YoY. Bernstein remains cautious, citing rising NPAs, elevated credit costs, and persistent margin pressure as key concerns.