News

Bajaj Finance – Q1FY2027

• Net Interest Income (NII), in line with estimates, grew strongly by 22.9% y-o-y and 6.7% q-o-q to Rs. 12,571 crore. Despite robust AUM growth, Net Interest Margin (NIM) slightly compressed by 7 bps y-o-y as yields on portfolio declined faster than funding costs.
• Pre-Provision Operating Profit, surpassed estimates slightly, rising 19.4% y-o-y and 5.1% q-o-q to Rs. 10,137 crore. Opex to AUM reduced, coming in at an annualized 3.72% (down 2 bps y-o-y and 5 bps q-o-q).
• Credit Costs came in below expectations by 24 bps at an annualized 1.46% of AUM—declining 46 bps y-o-y and 12 bps q-o-q driven by underlying improvements in overall asset quality.
• Profit After Tax, beat estimates by 5%, reaching Rs. 6,081 crore (up 27.6% y-o-y and 9.5% q-o-q), primarily fueled by strong PPOP growth and lower credit costs.
• Asset Quality, continued to strengthen as Gross NPA fell by 7 bps y-o-y and 5 bps q-o-q to 0.96%. Net NPA also fell to 0.39%, down 11 bps y-o-y and 2 bps q-o-q.
• AUM grow 23.9% y-o-y and 7.2% q-o-q to Rs. 546,944 crore despite focus on asset quality in MSME segment and running down of captive two-wheeler portfolio. Mortgages, urban/rural sales finance, gold loans, car loans, and commercial lending were the key AUM growth drivers.

View: The company delivered a strong quarterly performance, driven by robust AUM expansion (up 23.9% YoY) and improving asset quality (GNPA at 0.96%). NIM slightly compressed though cost efficiency and lower credit costs boosted earnings, allowing PAT to beat estimates.  We have a buy rating on stock with target price of Rs. 1,125. We will come out with detail note soon ASAP.

First Cut Q1FY2027

Actual Vs. Estimates

Key Ratios

Asset quality (%)