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Strong Profit Growth, but Asset Quality Ticks Up
Bajaj Finance announced strong fourth-quarter results for the fiscal year ending March 2026. Consolidated net profit climbed 22% year-on-year to ₹5,464.57 crore. This performance, slightly below the ₹5,511 crore consensus estimate, was driven by a large 20% surge in net interest income to ₹11,781 crore. Pre-provision operating profit also saw a healthy 21% increase. Despite these strong figures, the company’s asset quality showed a less positive trend, as gross non-performing loans (GNPL) increased to 1.01% from 0.96% in the previous quarter. Net NPAs improved slightly to 0.41% from 0.44%. The results were released after market close on Wednesday, April 29, 2026. Bajaj Finance's stock closed 0.99% lower at ₹932.80 following the announcement.
Premium Valuation Compared to Banking Peers
Bajaj Finance continues to trade at a higher valuation compared to its larger banking peers. Its trailing twelve-month (TTM) price-to-earnings (P/E) ratio is around 31-35x, much higher than HDFC Bank's approximately 15.8x and ICICI Bank's 18.4x. While competitors like Cholamandalam Investment and Finance Company trade at a P/E of around 27x and Shriram Finance at 22.4x, Bajaj Finance's multiple remains high. This premium valuation suggests investors expect sustained high growth. However, the recent uptick in GNPLs to 1.01% is notable, especially when compared to peers; for example, HDFC Bank reported a GNPL of approximately 1.15% and ICICI Bank around 1.40% in their recent disclosures. Historically, Bajaj Finance shares have reacted sharply to asset quality concerns, with declines of over 6% seen in July 2025 following a rise in GNPLs to 1.03%, and an 8% drop in November 2025 when GNPLs hit 1.24%. The company's market capitalization stands at approximately ₹5.79 lakh crore.
Rajiv Bajaj Departs Board Amid NBFC Sector Challenges
Rajiv Bajaj, a Non-Executive Director and a key figure within the Bajaj Group for over three decades, has informed the board he will not seek re-election at the upcoming Annual General Meeting on July 30, 2026. His departure marks a change in oversight. This transition occurs as the NBFC sector is changing. While the sector is projected to grow between 15-17% in FY26, growing faster than bank credit growth, it faces higher funding costs and margin pressure, especially for unsecured and small loans. Some analysts are cautious, pointing to potential lower earnings forecasts due to stress in the MSME portfolio. The company also declared a final dividend of ₹6 per share for FY26, its lowest payout since July 2019. This suggests a tendency to keep capital, potentially to increase reserves for rising credit costs or to strengthen its balance sheet.
Analysts Remain Positive Despite Asset Quality Concerns
Despite concerns regarding asset quality and valuation, most analysts maintain a positive outlook. The consensus rating for Bajaj Finance is 'Buy,' with 23 out of 35 analysts recommending the stock. The average 12-month price target across analysts is around ₹1,047.17, implying a potential upside of approximately 13.37% from current levels. Projections indicate strong earnings growth ahead, with EPS expected to grow by 20.8% per annum and revenue by 25.6% per annum. However, some analysts are more reserved; UBS's price target suggests a possible 18% downside, and JP Morgan flagged concerns over MSME asset quality impacting future earnings revisions. The company's investment rating was recently upgraded from 'Sell' to 'Hold' as of April 15, 2026, indicating a shift in sentiment, though caution is advised on its premium valuation.