Bajaj Finance Stock CRASHES 7%! Why Investors Are Panicked After Q2 Results?

Bajaj Finance's stock price fell by almost 7% to Rs 1,009.75 on Tuesday, reacting to its September quarter (Q2FY26) financial results. The company reported a Profit After Tax (PAT) of Rs 4,875 crore, showing a 22% year-on-year increase, though it was slightly less than market estimates. Net Interest Income (NII) also grew by 22% to Rs 10,785 crore.

The main concern for the market was the management's decision to lower the guidance for FY26 Assets Under Management (AUM) growth to 22–23% from the earlier 24–25%. This revision was due to observed stress in the MSME and captive two/three-wheeler loan portfolios, leading to cautious lending in these areas.

Operationally, Bajaj Finance disbursed 1.22 crore new loans, a 26% increase, and its customer base grew 20% to 11.06 crore.

However, asset quality showed minor deterioration. The Gross Non-Performing Asset (GNPANPA) ratio rose to 1.24% from 1.06% a year ago, and Net NPA increased to 0.60% from 0.46%. Loan loss provisions were up 19%.

Brokerages provided a mixed outlook. Motilal Oswal maintained a Neutral rating due to expensive valuations. JM Financial downgraded to ADD citing slower AUM growth. Morgan Stanley sees the dip as a buying chance, while HSBC and Jefferies retained Buy ratings with price targets suggesting upside. Bernstein remained cautious with an Underperform rating, concerned about rising NPAs and scaling pressures.

Analysts note that Bajaj Finance trades at a premium valuation (5x FY27 estimated book value, 26x FY27 earnings). While strong fundamentals support this, the trimmed growth guidance and emerging asset quality pressures offer limited near-term catalysts. The festive season might boost short-term disbursements.

Impact: The news has a significant negative impact on Bajaj Finance's stock price and sentiment towards the Non-Banking Financial Company (NBFC) sector. The market may react cautiously to other NBFCs with similar asset quality concerns. Rating: 8/10.

Difficult Terms: PAT (Profit After Tax): The profit a company makes after deducting all expenses, including taxes. NII (Net Interest Income): The difference between interest income from assets (like loans) and interest paid out on liabilities (like deposits or borrowings). AUM (Assets Under Management): The total market value of assets that a person or entity manages on behalf of clients. NPA (Non-Performing Asset): A loan where the borrower has failed to make scheduled payments for a specified period, usually 90 days. NIM (Net Interest Margin): A measure of the difference between the interest income generated by a bank or other financial institution and the income it has paid out to its lenders (the core profitability of its lending activities). CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period of time longer than one year. RoA (Return on Assets): A profitability ratio that indicates how profitable a company is relative to its total assets. RoE (Return on Equity): A measure of financial performance calculated by dividing net income by shareholders' equity. PPOP (Pre-Provision Operating Profit): Profit before accounting for provisions for loan losses and taxes. It shows the operating performance of the bank before considering potential bad debts. EPS (Earnings Per Share): The portion of a company's profit allocated to each outstanding share of common stock.