Key Takeaways
Bajaj Finance faces rising NPAs and cuts FY26 guidance. Analysis covers key risks, expert outlook, and investor strategy for 2025. Get insights now.
Market Introduction
Bajaj Finance faces rising NPAs and cuts FY26 guidance, with its stock plunging 7% after revised projections. The analysis covers key risks and expert outlook for investors in 2025. As of September 30, 2025, gross NPA rose to 1.24% from 1.06% a year prior.
This signals potential headwinds for investors, questioning the sustainability of its past momentum and demanding a closer look at its asset quality and future growth trajectory.
Bajaj Finance stock trades at ₹7,130 (Nov 12, 2025), with analyst targets ranging from ₹1,160 to ₹1,200.
We delve into the factors affecting its growth outlook.
Data at a Glance
| Metric | September 30, 2024 | September 30, 2025 | Change |
|---|---|---|---|
| Gross NPA | 1.06% | 1.24% | 0.18% |
| Net NPA | 0.46% | 0.60% | 0.14% |
| AUM (₹ Lakh Crore) | 3.74 | 4.62 | 23.5% |
| New Loans Booked (Million) | 20.66 | 25.66 | 24.2% |
In-Depth Analysis
Bajaj Finance, a prominent Indian NBFC, is navigating a period of strategic adjustments following a notable stock correction, primarily triggered by revised FY26 growth projections. Historically recognized for its rapid expansion, the company is now confronting emergent challenges within its loan portfolio, particularly in the SME and two/three-wheeler segments. This juncture is critical for investors, necessitating a thorough reassessment of the company’s asset quality and its capacity to maintain its previous growth trajectory in the competitive Indian credit landscape. The stock’s recent underperformance relative to benchmarks like the Nifty and BSE Sensex underscores these headwinds, prompting a strategic pivot towards emphasizing asset quality over aggressive expansion, a move reflecting evolving market dynamics and a proactive risk management stance.
The primary concern centers on the discernible upward trend in asset quality indicators. As of September 30, 2025, the Gross Non-Performing Assets (NPA) have climbed to 1.24% from 1.06% observed a year earlier, with Net NPAs rising to 0.60% from 0.46%. In response, Bajaj Finance has implemented a proactive reduction in unsecured MSME volumes by 25%, anticipating a moderation in overall growth to approximately 10-12% for FY26. While this strategic maneuver aims for long-term stability, it is expected to impact near-term growth figures. Management projects a return to normalized operations by Q4FY26 or Q1FY27, with subsequent revisions to growth strategies. Projected credit costs for FY26 are positioned at the higher end of the 1.85-1.95% range, indicating an elevated risk perception and a prudent approach to lending in these stressed segments, which is vital for sustaining investor confidence.
When contrasted with its peers, Bajaj Finance’s current situation presents a nuanced picture. Despite achieving a robust 24% year-on-year AUM growth to ₹4.62 lakh crore, the cautious forward guidance suggests underlying concerns. Competitors within the NBFC sector, including those affiliated with larger banking entities or operating as specialized lenders, offer diverse risk-reward profiles. The Indian regulatory framework for NBFCs, governed by SEBI and the RBI, places significant emphasis on asset quality and capital adequacy, creating a stable yet sometimes constraining operational environment. The market’s reaction underscores investor scrutiny regarding Bajaj Finance’s ability to balance risk management with sustained growth, a challenge common across the financial sector, especially in emerging economies.
Market analysts’ opinions are bifurcated. Axis Securities maintains a ‘Buy’ recommendation with a target price of ₹1,200, anticipating a return to normalized growth rates bolstered by diversification into gold and tractor loans. Conversely, Motilal Oswal Financial Services holds a ‘Neutral’ stance with a target of ₹1,160, citing high valuations and a lack of immediate catalysts for a significant re-rating. Key risks encompass the speed of recovery in stressed segments and the efficacy of newly introduced growth initiatives. Investors are advised to closely monitor asset quality trends and management’s strategic commentary for forward-looking insights into Bajaj Finance’s growth trajectory and potential market movements.
About the Author
