Bajaj Finance Limited delivered a strong performance in the second quarter of FY27, supported by healthy growth in its lending portfolio, higher net interest income and improving asset quality. The company continued to expand its customer base while maintaining profitability and strengthening its position across consumer finance, business loans, gold loans and other lending segments.

Consolidated net profit increased 28.7% year-on-year to ₹6,367 crore in Q2 FY27, compared with approximately ₹4,948 crore in the corresponding quarter last year. The increase reflects stronger operating income and lower credit costs on a comparable basis, although the company also created an additional provision to strengthen its financial resilience.

Net interest income, or NII, rose 23.6% year-on-year to ₹13,335 crore, compared with ₹10,785 crore in Q2 FY26. NII is a key performance measure for a lender because it reflects the difference between interest earned on loans and interest paid on borrowings and deposits.

Net total income increased 23% year-on-year to approximately ₹15,974 crore. This growth demonstrates the contribution of a larger loan book and continued demand across the company’s lending products.

Pre-provisioning operating profit increased approximately 23% to ₹10,699 crore. This measure indicates the earnings generated by the business before accounting for loan-loss provisions, making it useful for understanding underlying operating performance.

Assets under management, or AUM, increased 26.5% year-on-year to ₹5,84,624 crore as of September 30, 2026, compared with ₹4,62,261 crore a year earlier. The company added ₹37,680 crore to AUM during the quarter, demonstrating continued expansion in its lending portfolio.

Bajaj Finance booked 13.45 million new loans during Q2 FY27, an increase of approximately 11% year-on-year. The company added 4.42 million customers during the quarter, taking its total customer franchise to 128.85 million.

Management described the quarter as strong across several important measures, including AUM growth, new customer additions, profitability, return ratios and credit costs. The broad-based expansion across lending segments remains a key part of the company’s growth strategy.

Urban consumer finance grew 43% year-on-year, while rural consumer finance expanded 63%. These figures highlight the company’s reach across different customer groups and its ability to expand lending beyond large urban centres.

Microfinance, or MFI, grew 54% year-on-year, albeit from a relatively low base. Commercial vehicle and tractor financing expanded 89%, while loans against securities increased 42%. These segments offer opportunities for diversification, although their growth rates may fluctuate as market conditions and portfolio sizes change.

The micro, small and medium enterprise, or MSME, lending business grew by approximately 3%. Management expects growth in this segment to improve during the second half of FY27, with the potential to return to double-digit expansion as business momentum recovers.

Gold loans remain an important growth opportunity. Bajaj Finance continued expanding this business and added 321 gold-loan branches during the quarter, taking its network to 2,022 branches. Management expects to expand the network further to approximately 2,700–2,800 branches by the end of FY27.

The company is also gradually winding down its captive lending portfolio. Management indicated that the remaining book had reduced to approximately ₹2,400 crore. The reduction is expected to help lower credit costs over time, although the pace and extent of the benefit will depend on the performance of the remaining portfolio.

Asset quality improved year-on-year. Gross non-performing assets declined to 1.06% of gross loans at the end of September 2026, compared with 1.24% a year earlier. Net non-performing assets fell to approximately 0.42%, compared with 0.60% in Q2 FY26.

Loan losses and provisions totalled ₹2,166 crore during the quarter, including an additional ₹337 crore in prudent management and macroeconomic provisions. Excluding this additional provision, loan losses and provisions were approximately ₹1,829 crore, down around 12% year-on-year.

Credit costs therefore remained an important driver of profitability. While the company benefited from lower underlying provisions, management continues to maintain additional buffers against potential macroeconomic and portfolio risks.

Net interest margin is another important factor to monitor. Although NII grew strongly, the reported NII-to-AUM ratio was approximately 9.12%, down from 9.33% a year earlier. The ratio also declined sequentially, indicating some pressure on the income earned relative to the size of the lending portfolio.

Management expects modest margin moderation in the coming quarters, partly because of funding-cost changes and the evolving lending mix. Fee income growth, improved funding costs and expansion across different lending segments are expected to help offset some of this pressure.

Operating expenses as a proportion of net total income remained broadly stable at approximately 33%, compared with 33.1% in Q2 FY26. Maintaining cost discipline while expanding the customer base and branch network will be important for sustaining profitability.

The company’s deposit book stood at approximately ₹69,754 crore at the end of September 2026, accounting for around 14% of consolidated borrowings. Deposits form part of its funding strategy, alongside other borrowing sources, and can influence the overall cost and stability of funding.

Bajaj Finance reported a capital adequacy ratio of 20.33%, with Tier-I capital at 19.43%. The board also approved proposals to raise up to ₹11,700 crore through a qualified institutional placement and up to ₹5,800 crore through warrants convertible into equity shares for promoter and holding company Bajaj Finserv, subject to the required approvals.

The proposed capital raising is intended to strengthen the company’s capital base and support future growth. Investors should consider the potential benefits of additional capital alongside the implications of new share issuance and possible dilution.

Management maintained its FY27 AUM growth outlook at approximately 26–27%. It also expects to add 18–20 million customers and book around 60–62 million new loans during the financial year.

The company expects FY27 profit growth of approximately 22–25%, with return on equity targeted at 19–21%. These are management expectations, not guaranteed outcomes, and future performance will depend on lending demand, margins, funding costs, credit quality and operating expenses.

Overall, Bajaj Finance delivered strong Q2 FY27 growth in profit, net interest income and AUM, supported by a larger customer franchise and improved reported asset quality. The main factors to monitor in the coming quarters are margin trends, credit costs, MSME recovery, gold-loan expansion, funding requirements and the company’s ability to meet its FY27 growth targets.

This video is for educational and informational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investors should review official company disclosures and consider their own financial objectives and risk tolerance before making investment decisions.

Highlights in Short

• Consolidated net profit: ₹6,367 crore, up 28.7% YoY.
• Net interest income: ₹13,335 crore, up 23.6% YoY.
• Net total income: approximately ₹15,974 crore, up 23%.
• Pre-provisioning operating profit: approximately ₹10,699 crore, up 23%.
• Assets under management: ₹5.85 lakh crore, up 26.5%.
• Quarterly AUM addition: ₹37,680 crore.
• New loans booked: 13.45 million, up approximately 11%.
• Total customer franchise: 128.85 million.
• Urban consumer finance growth: 43%.
• Rural consumer finance growth: 63%.
• MSME lending growth: approximately 3%; management expects improvement in H2.
• Gold-loan branch network: 2,022; target of 2,700–2,800 by FY27-end.
• Gross NPA: 1.06%, down from 1.24% a year earlier.
• Net NPA: approximately 0.42%, down from 0.60%.
• Loan losses and provisions: ₹2,166 crore, including ₹337 crore in additional provisions.
• Capital adequacy ratio: 20.33%.
• FY27 AUM growth guidance: 26–27%.
• FY27 profit growth guidance: 22–25%.
• Proposed capital raising: up to ₹11,700 crore through QIP and ₹5,800 crore through warrants, subject to approvals.
• Key risks: margin pressure, funding costs, credit quality and capital requirements.