Bajaj Finance shares jump over 4% post Q4 earnings; what is driving Street optimism?

The results were declared post-market hours.

Earnings details

Leading NBFC Bajaj Finance on Wednesday reported a 22% increase in its consolidated profit after tax (PAT) to ₹5,553 crore for the three months ended March 2026 (Q4 FY26).

The company had reported a PAT of ₹4,546 crore in the year-ago period.

Its total income increased by 21% to ₹14,209 crore in the quarter under review from ₹11,755 crore logged in the January-March quarter of 2025, Bajaj Finance said in a regulatory filing to the stock exchanges.

The net interest income (NII) or core income grew by 20% to ₹11,781 crore in the fourth quarter of FY26 from ₹9,808 crore in the same quarter of the preceding fiscal.

The board recommended a final dividend on equity shares at ₹6 per share of face value of ₹1 each for the financial year ended March 31, 2026.

The company's assets under management (AUM) rose to ₹5.09 lakh crore as of March 31, 2026, from ₹4.16 lakh crore as of March 31, 2025, registering a growth of 22%.

On the asset quality front, the gross non-performing assets (NPAs) of the company increased to 1.01% from 0.96% a year ago.

However, Net NPAs declined marginally to 0.41% compared to 0.44% a year earlier.

For the entire financial year (FY26), the company's PAT stood at ₹19,332 crore and total income at ₹53,324 crore.

What did analysts say post-Q4 earnings?

Analysts remain broadly bullish on Bajaj Finance following its Q4 performance, citing strong earnings growth, improving asset quality, and a stable outlook for FY27.

Morgan Stanley highlighted that adjusted profit before tax (PBT) rose 26% year-on-year, beating estimates, driven by a sharp improvement in credit costs amid lower bad loan formation.

The management has guided for AUM growth of 22–24% in FY27, along with net credit costs of 145–160 basis points.

Morgan Stanley values the company at 22x FY28E price-to-earnings and 4.3x price-to-book, reflecting confidence in its growth trajectory.

Citigroup noted that Bajaj Finance reported a 22% PAT growth and delivered a return on assets (RoA) of 4.6%, ahead of estimates. Core credit costs improved to 1.75%, supported by a moderation in stress formation, while the company prudently created an overlay buffer of ₹1.4 billion.

Management expects credit costs to moderate further to 1.45–1.60% in FY27, backed by improving trends across loan vintages.

Citi also pointed out that key headwinds such as MSME stress and the rundown in captive two- and three-wheeler portfolios are now largely behind, with management guiding for 22–24% AUM growth, nearly twice the system average.

CLSA noted that Q4 performance was ahead of expectations, with core pre-provision operating profit (PPOP) and PAT exceeding estimates.

AUM growth remained steady at 22%, and management has reiterated its FY27 guidance of 22–24% growth.

CLSA also highlighted that the drag from the captive two-wheeler book is expected to reduce significantly, while MSME loan growth is likely to pick up in FY27.

The financial services firm added that management commentary during the conference call was positive, with a reiterated credit cost guidance of 1.45%–1.60%.