Bajaj Finance Q2 Profit Soars 22% to ₹4,875 Cr! Analysts Bullish Above ₹1270 Target Amidst Guidance Shift

Bajaj Finance announced its Q2 FY26 results, showing a 22% year-on-year increase in consolidated net profit to Rs 4,875 crore, which met market expectations.

Key Performance Metrics: Net interest income rose by 22% to Rs 10,785 crore. Assets Under Management (AUM) grew by 24% year-on-year to Rs 4.62 lakh crore. The customer base expanded to 110.6 million, with 4.1 million new customers added during the quarter. Gross Non-Performing Assets (NPAs) slightly increased to 1.24% from 1.03% in the prior quarter, while net NPAs remained stable at 0.6%.

Guidance Revision: The company revised its FY26 AUM growth guidance downwards to 22-23%, citing softer trends observed in the SME and housing finance segments.

Analyst Views: * Morgan Stanley: Reiterated 'Overweight' with a Rs 1,195 target. Noted potential disappointment from trimmed guidance but highlighted positives like expected declines in credit costs and cost efficiencies, suggesting near-term dips as buying opportunities. * HSBC: Maintained 'Buy' and raised the target to Rs 1,200. Praised in-line EPS, stable Return on Assets (RoA) and Return on Equity (RoE) due to improved cost-to-income ratios. Forecasts 28% EPS CAGR for FY26-28, driven by AUM growth, cost control, and normalized credit costs. * Jefferies: Issued 'Buy' with a Rs 1,270 target. Reported a 23% profit growth, slightly ahead of estimates. AUM grew 24%, with strong festive season performance, though growth guidance was cut. Expects credit costs to ease, projecting a 23% profit CAGR for FY25-28. * CLSA: Kept 'Outperform' with a Rs 1,200 target. Found results strong across metrics, with 24% AUM growth led by secured loans. Noted stable Net Interest Margins (NIMs), better fee income, and a slight increase in credit costs. Maintained credit cost guidance while lowering loan growth outlook. * Bernstein: Issued 'Underperform' with a Rs 640 target, expressing caution due to rising NPAs and scale-related pressures despite headline growth. Mentioned cost-tightening measures.

Impact: This news significantly impacts Bajaj Finance's stock performance and investor sentiment. The strong results provide a baseline, but the reduced AUM guidance and varying analyst outlooks suggest potential near-term volatility. The consensus among most key brokerages remains positive for the long term. Impact Rating: 7/10

Difficult Terms: * Consolidated Net Profit: The total profit of a company and its subsidiaries after all expenses and taxes are deducted. * Street Estimates: The average forecast or prediction made by financial analysts regarding a company's future financial performance. * Net Interest Income (NII): The difference between the interest income generated by a bank or financial institution and the interest it pays out to its lenders or depositors. * Assets Under Management (AUM): The total market value of the assets that a financial institution manages on behalf of its clients. * Gross Non-Performing Assets (NPAs): Loans or advances for which the principal or interest has remained overdue for a period of 90 days or more. * Net NPAs: Gross NPAs minus the provisions made by the bank for these bad loans. * FY26 AUM Growth Guidance: The company's projection for the percentage growth in its Assets Under Management for the fiscal year 2026. * SME Segment: Refers to Small and Medium-sized Enterprises, businesses that are typically smaller in scale than large corporations. * NIMs (Net Interest Margins): A measure of the profitability of a bank's interest-earning assets; it is the difference between the interest income generated and the interest paid out, expressed as a percentage of interest-earning assets. * RoA (Return on Assets): A profitability ratio that indicates how efficiently a company is using its assets to generate profit. * RoE (Return on Equity): A measure of how effectively a company uses shareholder investments to generate profits. * EPS CAGR (Earnings Per Share Compound Annual Growth Rate): The average annual growth rate of a company's earnings per share over a specific period, assuming profits are reinvested. * BVPS (Book Value Per Share): The company's net asset value divided by the number of outstanding common shares. * Basis Points: A unit of measure used in finance to denote the percentage change in a financial instrument. One basis point is equal to 0.01% (1/100th of a percent). * Fee Income: Revenue generated by a financial institution from non-interest-bearing services, such as processing fees, advisory fees, or service charges. * Credit Costs: The amount of money a financial institution loses due to defaults on loans; often expressed as a percentage of total loans. * Secured Loans: Loans backed by collateral, such as property or vehicles, which the lender can seize if the borrower defaults.