November 11, 2025 — Mumbai: Shares of Bajaj Finance Ltd, one of India’s leading non-banking financial companies (NBFCs), plunged almost 7% in early trade on Tuesday, despite the company posting strong double-digit profit growth for the July–September quarter (Q2 FY26).

The sharp decline came after the firm trimmed its credit growth guidance and flagged emerging stress in its MSME (Micro, Small, and Medium Enterprises) loan portfolio, raising short-term growth concerns among investors.

Q2 FY26 Results Overview

Bajaj Finance reported a 23% year-on-year rise in consolidated net profit to ₹4,948 crore for the quarter ended September 30, 2025, compared to ₹4,028 crore a year earlier.
The net interest income (NII) climbed 22% to ₹10,785 crore, up from ₹8,838 crore in the same period last fiscal year.

However, asset quality showed signs of deterioration:

• Gross NPA (Non-Performing Assets) rose to 1.24% (from 1.06% YoY).
• Net NPA increased to 0.60% (from 0.46% YoY).

These figures indicate early stress, particularly in the MSME and two-wheeler lending segments, prompting management to take a more cautious approach to credit expansion.

Revised Guidance and Outlook

The NBFC revised its credit growth guidance for FY26 to 22–23%, down from its earlier projection of 24–25%, signaling a more “balanced and prudent stance” toward asset growth.

The company also guided for:

• Flat NIMs (Net Interest Margins), as cost benefits will be passed to customers.
• Fee income growth of 13–15%.
• Credit cost maintained at 1.85–1.95% for FY26E.

Brokerage Views

JM Financial downgraded the stock to ‘ADD’ from ‘BUY’, cutting its FY26–FY27 EPS estimates by 2–3% and rolling forward valuations to FY28E.
It now values Bajaj Finance at around 4.7x P/BV and 24x P/E (Sep-27E), setting a revised target price of ₹1,140 (from ₹1,060 earlier).

Motilal Oswal Financial Services (MOSL) maintained a ‘Neutral’ rating, calling Q2 results “mixed.”
According to MOSL:

• Bajaj Finance trades at 5x FY27E P/BV and ~26x FY27E P/E.
• The company is expected to deliver a PAT CAGR of ~25% (FY25–FY28E) and RoA/RoE of 4.2%/22% by FY28E.
• However, given “rich valuations and limited near-term re-rating triggers,” MOSL set a target price of ₹1,160 (based on 4.8x Sep-27E BVPS).

Market Reaction

Despite robust profit growth, the reduction in growth outlook and signs of stress in key lending segments overshadowed the strong financial performance. Investors reacted swiftly, leading to a nearly 7% decline in the stock price during early Tuesday trading.

Analysts say that while Bajaj Finance remains a long-term structural growth story, near-term headwinds in MSME lending and compressed margins could limit upside potential in the coming quarters.