Whalesbook
📉 The Financial Deep Dive
The Numbers:
Bajaj Finance Limited (BFL) delivered a strong underlying performance in Q3 FY26. Profit Before Tax (PBT) before exceptional items surged 23% YoY to ₹7,102 crore, and Profit After Tax (PAT) saw a similar 23% YoY jump to ₹5,317 crore. This growth was propelled by a 22% YoY increase in Assets Under Management (AUM) to ₹4,85,883 crore, with the company adding ₹23,622 crore during the quarter. Net Interest Income (NII) grew 21% YoY to ₹11,317 crore, and Net Total Income (NTI) rose 19% YoY to ₹13,875 crore.
However, reported figures reflect a 6% YoY decline in PBT to ₹5,431 crore and PAT to ₹4,066 crore, attributable to an accelerated Expected Credit Loss (ECL) provision of ₹1,406 crore and a ₹265 crore one-time charge for gratuity liabilities. Despite these, operational efficiencies improved, with operating expenses to NTI reducing to 32.8% from 33.1% YoY. Annualised Return on Equity (ROE) improved to 19.6% and Return on Assets (ROA) to 4.6%.
Subsidiaries also showed healthy growth: Bajaj Housing Finance Limited (BHFL) reported 23% YoY AUM growth and 21% YoY PAT growth. Bajaj Financial Securities Limited (BFSL) achieved a remarkable 63% YoY AUM increase and 74% YoY PAT growth.
The Quality:
Asset quality remained stable, with Gross NPA (GNPA) at 1.21% and Net NPA (NNPA) at 0.47%. The company maintained robust capital adequacy at 21.45% (Tier-1: 20.60%) and a significant liquidity buffer of ₹15,081 crore for BFL, underscoring its financial resilience. The exceptional provisions, while impacting reported profit, are proactive measures to bolster the balance sheet and prepare for future growth under new labour codes and evolving risk landscapes.
The Grill & Discussion (LRS 2026-30 Strategy):
Bajaj Finance unveiled its ambitious Long-Range Strategy (LRS) 2026-30, aiming to position the company as India's lowest-risk financial services entity, a technology leader, and a deeply customer-centric organization. The strategy hinges on pervasive AI integration.
Key imperatives include a shift to customer-centricity, targeting a franchise expansion to 200-220 million customers and increasing Product Per Customer (PPC) to 6.5-7.5 by 2030. Technology leadership involves leveraging AI for innovation and customer experience, with targets of 160-180 million App installs and 3.5-4.5 billion web visitors by FY30. The 'Lowest Risk' pillar focuses on AI-enabled risk management and fraud prevention, aiming to keep GNPA below 1.2% and NNPA below 0.4%.
Risks & Outlook:
The core challenge lies in the execution of this aggressive AI-driven strategy amidst evolving market dynamics and competition. Achieving such rapid customer and AUM growth requires meticulous planning and operational agility. The long-term guidance sets a high bar: AUM growth of 25-27% CAGR, profit growth of 23-24% CAGR, ROA of 4.3-4.7%, and ROE of 19-21%. The company anticipates adding 17-18 million new customers in FY26.