Bajaj Finance has raised its full-year growth outlook for assets under management to 26-27% following a strong second quarter. The lender is also actively reducing risk in its personal and rural loan portfolios by cutting exposure to high-leverage customers. Investors may track whether this strategy successfully lowers credit costs as planned.
ICICI Securities recently released a report noting that Bajaj Finance has increased its growth expectations for the full fiscal year. The lender now expects its total loans, or assets under management, to grow by 26% to 27%, an increase from its earlier estimate of 22% to 24%. This upward revision follows a strong performance in the second quarter of the current fiscal year, during which the company's assets under management grew by 26.5% compared to the same period last year.
While the company is pushing for expansion, its management is also shifting focus toward stricter risk management. A significant part of this strategy involves adjusting the loan book in the personal, microfinance, and rural consumer segments. The company aims to reduce its exposure to customers who currently hold more than three active loans. By March 2027, the lender intends to cut this segment to 3.5% of its portfolio, effectively halving the current figure of 7%. This proactive approach suggests that the company is prioritizing the quality of its loan book over aggressive volume growth in higher-risk categories.
Alongside the growth update, the company provided a more positive outlook on credit costs. These costs represent the money a lender must set aside or lose when borrowers are unable to repay their debts. The company now expects these costs to stabilize at approximately 1.3% for the second half of the fiscal year, a downward revision from its earlier projection of 1.45% to 1.6%. Improving the stability of these costs is generally helpful for protecting profit margins, provided the company can manage its default rates effectively.
The report from the brokerage firm also provided a valuation perspective, assessing the standalone business alongside its housing finance subsidiary. It noted that when valuing the company, investors should account for the standard discount typically applied to holding companies. Looking ahead, the most important update for shareholders will be the actual execution of this risk-reduction plan. Investors will likely monitor whether the company can maintain its targeted growth rate while keeping bad loan expenses within the revised 1.3% guidance range.