Bajaj Finance (BAF IN) – Q2FY27 Result Update – Robust growth; NIM headwinds persist – BUY
Published on 20 Oct 2026
AUM grew 26.5% YoY to INR5,846.2bn driven by strong momentum across mortgages and urban/ rural consumer finance, while MSME growth is expected to recover in H2FY27. We build AUM growth of 26%/25% for FY27/FY28E in-line with management guidance. NIM (calc.) moderated to 9.5% and is likely to face marginally higher compression than earlier guidance (10-15bps) amid rising funding costs. Fee-income growth is expected at 15-18% over the medium term, with final regulations on insurance commissions and revolver loans remain key monitorables. Despite sequential asset quality deterioration, partly due to temporary shorter-tenor gold loan schemes, management remains confident of the credit cost outlook. We factor in credit cost of ~1.6% for FY27E. Additional provisioning buffers and the proposed INR175bn capital raise strengthen balance-sheet resilience. We retain our P/ABV multiple of 4.0x Sep’28E, arriving at a TP of INR1,150. Sustained growth, resilient asset quality and a strong balance sheet profile underpin our positive view. Reiterate BUY.
