With assets under management (AUM) surpassing ₹5 trillion, Bajaj Finance has achieved a significant milestone, solidifying its standing as one of India’s most powerful non-banking lenders. In Q4FY26, the company reported over 20% AUM growth and a 22% year-over-year increase in net profit to ₹5,550 crore, demonstrating again another solid quarter.
Improving quality is just as important to investors as growth. MSME lending stress and its modest but significant captive car portfolio were earlier sources of pressure, but they are gradually subsiding. From 2.9% in Q3FY26 to about 1.6% in Q4, credit costs fell precipitously, and more decrease is anticipated in FY27. This indicates better asset quality and future lower risk.
Drivers of growth are also changing. By FY27, secured lending segments—particularly gold loans—are predicted to grow from 3.5% to 5% of AUM due to their rapid expansion. By mid-FY27, MSME lending is expected to rebound to double-digit growth following a period of careful pruning, turning earlier headwinds into tailwinds.
Operational margins decreased slightly, with a net interest margin (NIM) of 9.5%, while costs increased as a result of branch expansion, labor code modifications, and AI investments. Over time, nevertheless, it is anticipated that these investments would increase efficiency. Almost 600,000 loan applications were processed during Diwali 2025 by the organization, which is actively utilizing AI. This year, capacity is anticipated to reach one million.
In FY27, management has projected AUM growth of 22–24%, which is over double the rate of the industry. With an estimated EPS CAGR of 26–28% between FY26 and FY28, analysts anticipate even higher earnings growth due to operating leverage and steady credit trends.
Valuation is still an issue, though. There are concerns about sustainability at scale because the stock is trading at a premium (about 4.4x FY27 book). Despite this, Bajaj Finance’s comparatively modest portion of the Indian lending market indicates substantial long-term growth potential.
All things considered, the company seems to be moving into a cleaner and more sustainable growth phase with high earnings momentum, better asset quality, and AI-driven efficiency.
