Bajaj Finance Ltd - Fundamental Analysis 2026
- Analysis Date: August 3, 2026
- Exchange: NSE (BAJFINANCE) / BSE
- Sector: Financials — NBFC (diversified consumer, SME and commercial lending)
- Market Cap: Rs. 7,16,109 Cr (Large Cap)
Executive Summary
Fundamental Score: 7.3/10 ⭐⭐⭐⭐
Investment Recommendation: Hold / Accumulate on Dips
Conviction Level: Medium
Target Price: Rs. 1,200-1,300 (~4-13% upside) — 12-month horizon, PE-based scenario analysis (see Investment Thesis; not a scraped brokerage consensus — analyst target data was not available from the sources fetched)
Key Thesis: Bajaj Finance is India's largest private-sector NBFC, compounding net profit at ~29-34% CAGR over the last five years with best-in-class (though recently ticking up) asset quality, zero promoter pledge, and a stable ~54.7% promoter holding. The business quality and growth case are excellent, but the stock's 34.9x PE and 6.28x price-to-book — the richest among large diversified NBFC peers — already price in a large chunk of that quality, leaving limited margin of safety for new capital at current levels.
Business Overview
Company Profile: Bajaj Finance Limited (BFL) is headquartered in Pune and is part of the Bajaj Group. It is mainly engaged in lending — a diversified portfolio across retail, SME and commercial customers with significant presence across urban and rural India — and also accepts public/corporate deposits and cross-sells insurance and payments products.
Business Model:
- Revenue Streams: Net interest income (spread between lending yield and cost of borrowings) plus fee and other income from a diversified loan book (consumer durables, personal loans, two/three-wheeler finance, SME loans, commercial lending, mortgages via Bajaj Housing Finance).
- Key Products/Services: Consumer durable/personal/two-wheeler loans, SME and commercial lending, co-branded credit cards (Insta EMI Card), digital app/EMI network, fixed deposits.
- Distribution: Pan-India branch and merchant-partner network combined with a large digital/app-based EMI ecosystem.
Market Position:
- Market Rank: India's largest private-sector diversified NBFC by market cap and scale.
- Key Competitors: Cholamandalam Investment & Finance, Shriram Finance, L&T Finance, HDB Financial Services, and consumer-lending arms of large private banks.
Competitive Moat:
- Scale + data-driven underwriting built over a large multi-decade customer franchise across retail and SME segments.
- Distribution reach via merchant tie-ups (consumer durables) and the wider Bajaj Group ecosystem (cross-sell with Bajaj Finserv's insurance arms).
- Diversified lending book (retail + SME + commercial) reduces single-segment concentration risk relative to mono-line NBFCs.
Management Quality:
- Leadership: Rajeev Jain (MD), under the ownership of Bajaj Finserv/Bajaj Group promoter entities.
- Track Record: Sustained multi-year compounding of profit (34.2% 5-year CAGR per Screener.in) through multiple credit cycles.
- Concerns: The RBI has in the past taken supervisory action against specific digital-lending products at BFL over compliance/disclosure gaps (temporary restrictions on select loan-disbursal products, later lifted) — noted here as a historical episode reflecting regulatory scrutiny risk typical of large digital lenders; verify current status directly with the company/RBI before acting on this point, as it was not independently re-confirmed in this session's data pull.
Corporate Governance:
- Promoter Holding: 54.68% (Jun 2026) — adequate, though down from 55.87% (Sep 2023), largely due to a step-down between Sep 2023 and Mar 2024; broadly stable since (54.69-54.73% band).
- Promoter Pledge: No pledge reported on the fetched shareholding data — clean.
- Institutional Support: FII 20.20% (Jun 2026, down from 21.33% in Mar 2026), DII 16.30% (Jun 2026, up from 15.10% in Mar 2026) — DII buying has offset FII selling in the latest quarter.
Financial Analysis
Revenue and Profit Trends
Annual Performance (Consolidated)
| Metric | FY22 | FY23 | FY24 | FY25 | FY26 | TTM |
|---|---|---|---|---|---|---|
| Total Income (Rs. Cr) | 31,633 | 41,411 | 54,972 | 68,832 | 81,985 | 85,964 |
| Financing Profit (Rs. Cr) | 9,905 | 16,018 | 19,987 | 22,963 | 27,088 | 28,883 |
| Financing Margin % | 31% | 39% | 36% | 33% | 33% | 34% |
| Net Profit (Rs. Cr) | 7,028 | 11,508 | 14,451 | 16,779 | 19,332 | 20,648 |
| EPS (Rs.) | 11.61 | 19.01 | 23.35 | 26.77 | 30.56 | 32.62 |
Note: "Financing Margin %" here is Screener's (Revenue - Interest - Expenses) / Revenue metric, not a bank-style NIM — treat it as a proxy for spread + fee economics, not a directly comparable NIM figure.
Revenue CAGR (FY22-FY26): ~26.9%. Net profit CAGR (FY22-FY26): ~28.8%. Over the trailing 5 years (FY21-FY26), net profit CAGR is ~34.3%, matching Screener's reported "34.2% profit CAGR over the last 5 years."
Quarterly Performance (Recent 5 Quarters)
| Quarter | Q2 FY26 (Sep 2025) | Q3 FY26 (Dec 2025) | Q4 FY26 (Mar 2026) | Q1 FY27 (Jun 2026) |
|---|---|---|---|---|
| Revenue (Rs. Cr) | 20,179 | 21,013 | 21,606 | 23,165 |
| Financing Margin % | 34% | 28% | 35% | 36% |
| Net Profit (Rs. Cr) | 4,948 | 4,066 | 5,553 | 6,081 |
| Gross NPA % | 1.24% | 1.21% | 1.01% | Not reported in fetched data |
| Net NPA % | 0.60% | 0.47% | 0.41% | Not reported in fetched data |
Q3 FY26 (Dec 2025) shows a dip in both financing margin and net profit, driven by a one-off negative "Other Income" line (-Rs. 262 Cr that quarter) rather than a core lending-margin deterioration — profit and margin both recovered sharply in Q4 FY26 and Q1 FY27.
Asset Quality Trend
| Metric | Mar 2024 | Mar 2025 | Sep 2025 | Dec 2025 | Mar 2026 |
|---|---|---|---|---|---|
| Gross NPA % | 0.85% | 0.96% | 1.24% | 1.21% | 1.01% |
| Net NPA % | 0.37% | 0.44% | 0.60% | 0.47% | 0.41% |
Asset quality has ticked up modestly from FY24 lows but remains at levels considered strong for a diversified consumer/SME NBFC book (sub-1.5% GNPA), with the latest print (Mar 2026) improving sequentially from the Sep 2025 peak.
Cash Flow Quality
| Metric | FY26 (Rs. Cr) | Assessment |
|---|---|---|
| Operating Cash Flow | -65,790 | Structurally negative — this is normal for a growing NBFC, not a red flag. Loan disbursements are booked as operating outflows in the cash flow statement even though loans are performing, income-generating assets. |
| Free Cash Flow | -66,686 | Same driver as above (capex itself is immaterial for a lending business). |
| Financing Activity | +67,433 | Funded via fresh borrowings (Borrowing on the balance sheet grew from Rs. 3,61,249 Cr to Rs. 4,35,112 Cr YoY) to fund loan book growth. |
Cash Flow Rating: Not meaningfully comparable to a standard operating-company FCF framework; profitability (net profit, margins) and asset quality are the correct lens for an NBFC, both of which remain healthy. Rating on a "does this look sustainable" basis: 7/10 — reliant on continued access to wholesale funding markets at reasonable spreads, which is a structural feature (and risk) of the NBFC model, not unique to BFL.
Balance Sheet Strength
| Metric | Mar 2026 (Rs. Cr) | Analysis |
|---|---|---|
| Equity Capital | 622 | Jumped from Rs. 124 Cr (Mar 2025) — the ~5x increase is consistent with a bonus share issue during FY26; per-share metrics (EPS) in the table above already appear to be reported on a like-for-like adjusted basis given the smooth EPS trend across quarters. This corporate action was inferred from the balance sheet data, not independently confirmed against a specific company announcement in this session. |
| Reserves | 1,13,377 | Grew from Rs. 96,569 Cr (Mar 2025), driven by retained profits. |
| Total Equity (Capital + Reserves) | 1,13,999 | Book value per share ≈ Rs. 183. |
| Borrowings | 4,35,112 | Up from Rs. 3,61,249 Cr (Mar 2025), funding loan book growth. |
| Total Assets | 5,59,952 | Up from Rs. 4,66,127 Cr (Mar 2025), ~20% YoY balance sheet growth. |
Balance Sheet Rating: 8/10 — Leverage (Borrowings/Equity ≈ 3.8x) is high in absolute terms but is structurally normal (and within RBI norms) for a large NBFC; the key watch-items are funding-cost trends and continued access to diversified funding sources rather than the leverage ratio itself.
Shareholding Pattern (India-Specific)
| Category | Jun 2026 | QoQ Change (vs Mar 2026) | Assessment |
|---|---|---|---|
| Promoter Holding | 54.68% | -0.03pp | Stable, adequate |
| Promoter Pledge | Nil (not reported) | - | Clean |
| FII Holding | 20.20% | -1.13pp | Selling in latest quarter |
| DII Holding | 16.30% | +1.20pp | Buying, offsetting FII selling |
| Public | 8.64% | -0.09pp | Gradual multi-year decline as retail float shrinks with re-rating |
Shareholding Rating: 8/10
Key observations:
- Promoter holding has been essentially flat (54.69-54.73% band) since Mar 2024 after a step-down from ~55.9% in Sep 2023 — no pledge, no recent active dilution signal.
- DII accumulation in the latest quarter (Jun 2026) has more than offset FII selling, a mildly positive domestic-institutional-confidence signal.
Valuation
| Metric | Bajaj Finance | Cholamandalam (CHOLAFIN) | Shriram Finance (SHRIRAMFIN) | HDB Financial (HDBFS) | Assessment |
|---|---|---|---|---|---|
| Current Price | Rs. 1,150 | Rs. 1,870 | Rs. 1,080 | Rs. 686 | - |
| Market Cap (Rs. Cr) | 7,16,109 | 1,59,434 | 2,54,119 | 56,961 | Bajaj Finance is far larger than all listed NBFC peers |
| PE Ratio | 34.9 | 27.8 | 22.4 | 26.1 | Bajaj Finance trades at the highest PE among these peers |
| Book Value (Rs.) | 183 | 357 | 350 | Not available in fetched data | - |
| Price/Book | 6.28x | 5.24x | 3.09x | Not available in fetched data | Bajaj Finance also the most expensive on P/B |
| Dividend Yield | 0.46% | 0.11% | 1.00% | 0.58% | Mid-pack |
| ROE | 18.2% | 19.4% | 16.4% | 14.7% | Second-best ROE in the peer set, behind Cholamandalam |
| ROCE | 10.9% | 9.71% | 11.5% | 9.79% | In line with peers |
| PE / ROE (quality-adjusted) | 1.92 | 1.43 | 1.37 | 1.78 | Bajaj Finance is the most expensive on a quality-adjusted basis among these four |
Valuation Verdict: EXPENSIVE
Screener.in's own automated flags note the stock "is trading at 6.30 times its book value" as a caution. Despite genuinely strong fundamentals, Bajaj Finance's PE/ROE ratio of 1.92 is the richest of the four large diversified NBFCs compared here — Cholamandalam offers a higher ROE (19.4% vs 18.2%) at a meaningfully lower PE (27.8x vs 34.9x) and PB (5.24x vs 6.28x).
Valuation Rating: 4/10
Fundamental Score: 7.3/10
| Criteria | Score | Rationale |
|---|---|---|
| Business Quality | 8.5/10 | Scale leadership, diversified book, strong distribution/cross-sell moat via the Bajaj Group ecosystem |
| Financial Health | 8/10 | ~27-29% multi-year revenue/profit CAGR, stable financing margins (~33-36%); negative CFO is structurally normal for an NBFC, not a red flag |
| Shareholding Pattern | 8/10 | Stable ~54.7% promoter holding, zero pledge, DII buying offsetting recent FII selling |
| Valuation | 4/10 | Richest PE (34.9x) and P/B (6.28x) among large diversified NBFC peers; most expensive on a quality-adjusted (PE/ROE) basis |
| Growth Prospects | 8/10 | ~27% revenue CAGR, large under-penetrated Indian consumer/SME credit market, ongoing diversification (housing finance, cards) |
| Risk Management | 7/10 | Best-in-class but recently ticking-up asset quality (GNPA 0.85% → 1.01% over two years), high (but NBFC-typical) leverage, past regulatory friction on specific digital-lending products |
Composite Score: 7.3/10
Investment Thesis
Bull Case (Target: Rs. 1,300 — ~13% upside)
- Profit growth sustains at 25%+ as the loan book keeps compounding off a large, diversified base.
- Asset quality normalizes back toward FY24 lows (sub-0.9% GNPA) as the Sep 2025 uptick proves transient.
- Market continues to reward scale/quality with premium multiples, keeping PE near current 34-35x as EPS grows.
Bear Case (Target: Rs. 950 — ~-17% downside)
- Asset quality deterioration continues beyond the recent uptick, pressuring credit costs and profit growth.
- PE de-rates toward peer-average levels (~25-28x) as the market's tolerance for the current premium narrows.
- Regulatory action on specific lending products (as has happened before) disrupts growth in an affected segment.
Base Case (Target: Rs. 1,200)
Earnings continue compounding at ~20-25% over the next year while the PE modestly compresses from 34.9x toward the low-30s as growth decelerates from its highest historical rates — net roughly flat-to-modestly-positive returns from the current price.
Expected Return Distribution (illustrative, not probability-weighted by any external source):
- Bull Case (~30% probability): ~13% upside — Rs. 1,300
- Base Case (~45% probability): ~4% upside — Rs. 1,200
- Bear Case (~25% probability): ~-17% downside — Rs. 950
Risk Assessment
| Risk | Probability | Impact | Details |
|---|---|---|---|
| Asset quality deterioration | Medium | Medium | GNPA has risen from 0.85% (Mar 2024) to a 1.24% peak (Sep 2025) before easing to 1.01% (Mar 2026); a growth-led consumer-lending book is inherently sensitive to the credit cycle |
| Valuation de-rating | Medium | High | Stock trades at the richest PE/PB among large diversified NBFC peers; any growth disappointment could trigger a sharp multiple correction |
| Funding cost / wholesale market access | Low-Medium | Medium | Structural reliance on borrowings (Rs. 4,35,112 Cr) to fund growth; rate-cycle or liquidity shocks affect spreads |
| Regulatory/compliance scrutiny | Low-Medium | Medium | Large digital lenders face periodic RBI supervisory attention on specific products/practices |
Overall Risk Rating: MEDIUM (6/10)
Catalysts
Near-term (0-3 months):
- Q2 FY27 results — watch for continued sequential improvement in Gross/Net NPA trends
- Commentary on funding cost trajectory amid the prevailing rate environment
Medium-term (3-12 months):
- Sustained margin/asset-quality stabilization back toward FY24 levels
- Continued diversification traction (housing finance, cards, SME) as a growth lever beyond core consumer lending
Long-term (1-3 years):
- Structural under-penetration of consumer/SME credit in India remains the core long-run growth driver
- Full utilization of the cross-sell ecosystem with Bajaj Finserv's insurance arms
Key Monitoring Parameters
Quarterly:
- Gross/Net NPA trend (watch for a return to the Sep 2025 highs vs. continued improvement toward FY24 lows)
- Financing margin % stability (~33-36% band)
- Promoter holding (watch for any move meaningfully below the ~54.7% band)
Trigger Events:
- ✅ Buy more: A pullback toward Rs. 950-1,000 (closer to peer-average PE/PB) while growth and asset quality metrics remain intact
- 🔻 Reduce/Exit: Sustained GNPA
>1.5%, or promoter holding drops meaningfully below 50%
Conclusion
Bajaj Finance is unambiguously a high-quality franchise: India's largest private NBFC, compounding profit at ~29-34% over multiple years, with a diversified book, zero promoter pledge, and asset quality that — while ticking up modestly — remains strong in absolute terms. The complication is valuation: at 34.9x PE and 6.28x book value, the stock is priced richer than every large diversified NBFC peer examined here, including Cholamandalam, which currently offers a comparable-to-better ROE at a meaningfully cheaper multiple.
This is a "great business, full price" situation rather than an obvious mispricing in either direction. Existing holders have limited reason to sell given the underlying compounding, but new capital is better deployed on a pullback toward the Rs. 950-1,050 zone (closer to peer-average multiples) unless growth/asset-quality trends improve enough to justify sustaining the current premium.
Investment Recommendation: Hold (existing positions) / Accumulate on dips toward Rs. 950-1,050 (new capital) Suitable For: Long-term investors seeking exposure to India's formal consumer/SME credit growth story, who are comfortable paying a quality premium Portfolio Allocation: 3-6% of portfolio (large-cap core financial holding, not a concentrated bet)
Related Analyses
- Bajaj Finserv - Fundamental Analysis — the listed holding company that owns ~54.68% of Bajaj Finance; useful for sum-of-parts context
Disclaimer
This analysis is for educational and informational purposes only and does not constitute investment advice. Conduct your own due diligence and consult a qualified financial advisor before making investment decisions.
Data Sources
- Screener.in (consolidated financials) — Revenue, profit, balance sheet, cash flow, shareholding, asset quality (Accessed: 2026-08-03)
- Screener.in peer pages — Cholamandalam (CHOLAFIN), Shriram Finance (SHRIRAMFIN), HDB Financial (HDBFS) top ratios (Accessed: 2026-08-03)
- MoneyControl — Attempted for analyst target-price consensus; dynamic page content did not yield extractable target-price data in this session, so analyst consensus targets are marked as not available rather than estimated
Data Timestamp: August 3, 2026 (Stock Price: Rs. 1,150, Market Cap: Rs. 7,16,109 Cr)
Next Update Recommended: After Q2 FY27 earnings (October-November 2026) or a material shift in Gross NPA trend