AI-generated · cited to primary sources · not investment advice
Bajaj Finance (500034) Dec 2025 Filing Analysis
Does management do what it says?
The MSME business grew by 11% in Q3, aligning with the moderated guidance of 10-12%. Management expects it to take 2-3 more quarters to return to 20%+ growth. (1 met, 1 missed across 2 tracked commitments)
“We now expect MSME business to grow in the current full fiscal by 10-12% only.”
The company is implementing a permanent LGD floor across all business lines to strengthen provisioning. — target: Permanent implementation of LGD floors (+1 more commitment)
“we expect significant improvements in credit costs for FY'27. ... That should also lead to significant improvement in loan loss to average AUM metric in second half of the year and also in FY'27.”
Management targets the gold loan business to reach INR 27,000 to 30,000 crores by March 2027. — target: INR 27,000 - 30,000 crores
“It should be between INR 27,000 crores to INR 30,000 crores business by March '27.”
See the full cited Management analysis of Bajaj Finance
How durable is the business?
The Rural B2C segment has seen a significant improvement in asset quality, moving from a 'yellow' internal risk rating to 'green', allowing for a potential rebuild and faster growth. (1 expanding)
“And talking about rural B2C, after a long time, we have now revised the management assessment from yellow that it was tagged for close to about 2 years to green.”
The company successfully improved its cost of funds by 27 basis points in Q2, though it is passing these benefits to customers to maintain flat Net Interest Margins (NIM). (3 stable)
“In terms of cost of funds and liquidity, cost of funds continue to improve, improved by 27 basis points in Q2 and came in at 7.52%.”
Management has taken a 'risk-first' approach, virtually cutting unsecured MSME volumes by 25% due to incipient stress across the board, leading to significantly moderated growth expectations. (1 contracting)
“We have virtually cut MSME business by 25% in our unsecured MSME volumes. We now expect MSME business to grow in the current full fiscal by 10-12% only.”
See the full cited Business Model analysis of Bajaj Finance
What could break the thesis?
The risk is easing as efficiency has improved. The Opex to NTI ratio dropped to 32.6% in Q2 FY26 from 33.2% in the previous year's quarter. (3 easing, 2 stable)
“Opex to NTI improved to 32.6% as against 33.2% in Q2 last year. AI implementation across each line of business continues to move forward.”
See the full cited Risk analysis of Bajaj Finance
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