Bajaj Finance Shares Fall 8% as Asset Quality Weakens in Q2
A Sudden Slide in the Stock
Shares of Bajaj Finance slipped sharply on November 11, tumbling over 8% intraday to hit ₹997 on the NSE.
Even though the company posted healthy quarterly numbers, the Street reacted negatively to the worsening asset quality, pulling the stock briefly below the ₹1,000 mark.
Last seen, the stock recovered slightly but was still down 7.54% at ₹1,003.20.
Why the Market Reacted: Asset Quality Concerns
GNPAs and NNPAs Rise
The company reported a clear deterioration in its asset book:
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Gross NPAs: 1.24% (up from 1.06% last year)
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Net NPAs: 0.6% (up from 0.46%)
For an NBFC of Bajaj Finance’s scale, even small increases in NPAs signal rising stress.
Capital Adequacy Still Healthy
The capital adequacy ratio remained strong at 21.23%, giving the company enough buffer for future growth and risk absorption.
Q2 Performance: Strong Numbers, Soft Sentiment
Profit & Income Growth
Despite NPA concerns, Bajaj Finance delivered solid financials:
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Net Profit: ₹4,948 crore (up 23% YoY)
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Total Income: ₹20,181 crore (up from ₹17,095 crore)
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NII: ₹10,785 crore (up 22%)
The company continues to scale steadily.
Rising Expenditure
Total expenditure increased to ₹13,576 crore, reflecting expansion, higher operating costs, and rising credit costs.
AUM Growth Remains Impressive
Assets under management (AUM) expanded 24%, reaching ₹4.62 lakh crore.
What Analysts Are Saying
CLSA: “Operationally Strong, but Mixed Asset Quality”
CLSA highlighted:
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Most operating metrics were on track
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Credit costs rose 3 bps QoQ to 2%
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Net slippages increased
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But 30-day past due (DPD) formation improved to the best level in several quarters
Management also trimmed its loan growth guidance slightly to 22–23%.
What Is 30 DPD?
It means a borrower’s payment is 30 days overdue—a key early signal of emerging credit stress.
Bernstein: “Growth is Strong, but Stress Is Rising”
Bernstein appreciated the strong headline numbers:
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24% AUM growth
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23% PAT growth
But it also cautioned that as Bajaj Finance grows larger, pressure to maintain high growth is showing.
Unlike many NBFCs that reported improving asset quality this quarter, Bajaj Finance saw broad-based deterioration.
To protect profitability, the company has started tightening costs and optimizing its presence.
HSBC: “Healthy EPS Outlook Ahead”
HSBC noted that Q2 EPS was in line with expectations.
RoA and RoE stayed stable due to cost efficiencies.
It expects:
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Higher AUM growth
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Better cost control
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Normalizing credit costs
Together, these could help Bajaj Finance deliver 28% EPS CAGR between FY26–28.
Jefferies: “Festive Season Strong but Growth Guidance Trimmed”
Jefferies highlighted:
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24% YoY AUM growth
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A solid festive season performance
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But slower traction in SME and housing loans
Due to this, management cut growth guidance by 100 bps to 22–23%.
What This Means for Investors
Short-Term Pressure, Long-Term Story Intact
The market reacted sharply to the rise in NPAs.
For financial companies, asset quality is a sensitive indicator, and even small changes can move the stock significantly.
But the underlying business continues to grow strongly:
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High profit growth
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Expanding AUM
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Strong capital position
The Key Watchpoint
Credit behaviour in the SME and housing segments will be crucial in the coming quarters.
If NPAs stabilize, the stock may regain confidence.
If stress rises further, more volatility could follow.
Conclusion
Bajaj Finance delivered solid growth in Q2, but the market focused on the deterioration in asset quality.
With management tightening costs and revising growth expectations, the next few quarters will be critical in determining how the stock behaves.
For now, investors are balancing between strong performance and rising credit risks—a combination that demands careful monitoring.
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