Financials
Financials in One Page
Bajaj Finance is a scale spread-lender. The engine is simple: borrow ₹4.4 lakh crore wholesale, lend to ~10 crore Indian consumers and small businesses at much higher rates, keep ~33 paise of every revenue rupee as net interest income, then deduct opex, credit costs and tax to leave ~24 paise as net profit. The book has compounded at roughly 25% a year for a decade, with ROE oscillating between 17% and 23%. The bear note today is not on the franchise — it's on the slope of three lines: financing margin (down from 39% in FY2023 to 33% in FY2026), gross NPA (0.85% to 1.01% with a 1.24% intra-year peak), and ROE (23% in FY2023 to 18% in FY2026 as the equity base rebuilds faster than profit). The balance sheet is strong (~₹1.14 lakh crore of equity, leverage 4.9x), credit costs are absorbed in real time, and dividend payout has roughly doubled. At ₹910 the stock trades on 31x earnings and ~5.2x book — a clear premium even versus high-quality NBFC peers, which makes every basis point of NIM and asset quality from here the marginal price-setter.
Total Income FY2026 (₹ crore)
Net Profit FY2026 (₹ crore)
Net Financing Margin
Return on Equity
Total Income +17.6% YoY; Net Profit +15.2% YoY.
Market Cap (₹ crore)
Trailing P/E (x)
Price / Book (x)
The financial story in one sentence: book and earnings still compound at mid-teens, but margin and asset quality are inflecting at the same time the multiple sits near a decade high — leaving little room for slippage on either credit cost or NIM.
A short glossary, since the rest of the page assumes them:
- Net Interest Income (NII) — interest earned on loans minus interest paid on borrowings. In screener's NBFC layout this appears as "financing profit."
- Net Interest Margin (NIM) — NII as a share of total income (here labelled "financing margin"). For BFL we use the financing-margin field.
- Gross / Net NPA — gross / net non-performing assets as a share of the loan book. The credit-quality scoreboard.
- ROE — net profit divided by average shareholders' equity. The single number that summarises a lender's economics.
- AUM — assets under management (the loan book). Total assets is the closest proxy in this dataset.
- Capital adequacy / leverage — total assets divided by equity tells you how aggressively the balance sheet is geared.
Revenue, Margins, and Earnings Power
For a lender, "revenue" is a confusing word — it mostly means interest income on loans, plus fees. What matters is whether that interest income, after the cost of borrowing, leaves enough margin to absorb credit losses and overheads. So this section shows two lines that matter: total income (top line) and the financing profit (NII) that drops out after interest expense.
Total income compounded at 24% a year over a decade and net profit at 30%. Operating leverage is real: the gap between top line and bottom line widened most aggressively during FY2022–FY2024 as post-Covid loan growth re-accelerated and credit costs normalised. The two recent years (FY2025 and FY2026) tell a different story — top line still growing 17–18%, but profit growth has slowed to 15%. That deceleration is the most important pattern on this page; the rest of the file is a search for why.
Margin profile
The mechanics: financing margin (blue) peaked at 39% in FY2023 when funding costs were still benign and yield mix favoured higher-priced consumer durable and personal loans. It has since fallen ~600 bps to 33% as cost of funds reset higher with the rate cycle and the mix shifted toward lower-yielding mortgages and gold loans. The interest cost ratio (grey) confirms this: borrowing cost absorbed only 31% of total income in FY2023 versus 35–36% now. Net margin (pink) has tracked NIM down with a one-year lag, from 28% in FY2023 to 24% in FY2026 — exactly the slippage that the headline EPS hides.
Quarterly trajectory — the inflection is real
The 3Q FY2026 quarter is the one to look at twice. Total income kept growing (₹21,013 cr versus ₹20,179 cr the prior quarter), but financing profit fell from ₹6,861 cr to ₹5,937 cr — financing margin collapsed from 34% to 28%. Net profit fell to ₹4,066 cr from ₹4,948 cr, and EPS dropped to ₹6.39 from ₹7.84. That single quarter was driven by an ₹262 cr negative other-income hit and elevated opex (one-time stress provisioning on the microfinance book, per public commentary). 4Q FY2026 bounced back hard — NII recovered to ₹7,654 cr, financing margin back to 35%, net profit to ₹5,553 cr — but the message stands: at this scale, a single quarter of credit normalisation can cut earnings by 20%. The two-quarter run-rate is now back on trend, but the volatility is new.
Cash Flow and Earnings Quality
Two warnings before the chart, because this is where most generalists misread NBFCs:
- For a lender, "cash from operations" under Ind-AS includes the change in loans — every rupee of net new lending is shown as an operating cash outflow. So a fast-growing NBFC will show large negative CFO every year. It is not a red flag and not a cash-quality problem.
- The standard "FCF = CFO minus capex" definition is essentially meaningless for an NBFC. The right cash-quality test is whether net profit is fully booked, whether it reconciles to retained earnings, and whether the loan book is being funded with durable wholesale liabilities rather than short-term refinancing risk.
The pattern is textbook for a growing NBFC. Every year operating cash flow runs deeply negative — ₹65,790 cr of outflow in FY2026 — because the loan book grew by a similar amount. Net profit (pink, small) is dwarfed by lending activity. Financing cash flow (green) almost perfectly funds the gap: ₹67,433 cr of debt-and-equity raise in FY2026 to fund ₹65,790 cr of new lending. That tight match is the signature of a well-managed NBFC — the business does not run out of funding ahead of its asset growth.
Earnings quality — the cleaner test
| Test | What we look for | What we see |
|---|---|---|
| Net profit reconciles to retained earnings (after dividend) | Profit minus dividend should ≈ change in reserves | Holds tightly each year; no missing rupees |
| Tax rate consistency | No suspicious jumps | FY2021–FY2026 effective tax in 24–28% band (statutory adjusted), no surprises |
| Dividend payout discipline | Rising as scale increases | 10% in FY2015 → 21% in FY2025 / 20% in FY2026 |
| Non-recurring items | Disclosed and called out | One large negative "other income" of ₹262 cr in 3Q FY2026 — likely MFI-related stress provision |
For BFL, the right cash-quality lens is: does reported profit translate into equity build-up? Retained profit (profit minus dividend) added ₹15,500 cr to reserves in FY2026 — equity capital is being built by earnings, not financial engineering. SBC is not material for an NBFC of this size.
The one nuance: equity capital (paid-up) jumped from ₹124 cr in FY2025 to ₹622 cr in FY2026 — that is a bonus issuance / share-split adjustment, not a real capital raise, and it is fully offset by a fall in reserves of equal magnitude. Total net worth (₹1.14 lakh crore) is the real number to anchor on.
Balance Sheet and Financial Resilience
For BFL, "balance sheet strength" is shorthand for three things: enough equity to absorb credit shocks, diversified and well-laddered borrowings, and asset quality that proves the book is what management says it is.
The visual punchline: borrowings have grown 6.5x since FY2018 (₹66,557 cr → ₹4,35,112 cr) but the equity base has grown 7.2x in parallel (₹15,848 cr → ₹1,13,999 cr). Leverage has stayed in a 4.6x–6.3x band the whole way — it actually peaked in FY2019 (6.3x) and has come down to 4.9x today as the company has consistently retained earnings. For a regulated NBFC where the RBI cap on leverage is far higher, this is a fortress balance sheet by intention: management is buying optionality, not stretching it.
Asset quality — the credit scoreboard
GNPA crept from 0.85% (Q4 FY2024) to a peak of 1.24% (Q2 FY2026), then recovered to 1.01% by Q4 FY2026. That is a 39 bps GNPA cycle through a microfinance/unsecured stress event. Net NPA followed the same shape, peaking at 0.60% and easing to 0.41%. By scale-of-book context (~₹5.2 lakh crore of receivables), a 39 bps GNPA swing is a ~₹2,000 cr swing in stage-3 assets — the system clearly absorbed it (FY2026 net profit still grew 15%) but the curve is now the single most-watched chart on this stock.
Liquidity & funding stance
| Line | FY2024 | FY2025 | FY2026 | Read |
|---|---|---|---|---|
| Borrowings (₹ crore) | 2,93,346 | 3,61,249 | 4,35,112 | +20% YoY funding raise to support 20% AUM growth |
| Investments (₹ crore) | 30,881 | 34,441 | 30,578 | Liquidity buffer ~5–6% of borrowings — comfortable |
| Other liabilities (₹ crore) | 5,700 | 8,185 | 10,841 | Modest growth — no signs of short-term build-up |
| Fixed assets (₹ crore) | 3,250 | 3,780 | 4,004 | Sub-1% of assets — capital-light operating model |
The investment book (₹30,578 cr in FY2026) is the explicit liquidity cushion — roughly 7% of borrowings, in line with regulator expectations. No working-capital flag here; for an NBFC the funding question is the one to ask, and FY2026 was funded with the same wholesale-borrowings mix that has worked through past cycles.
Returns, Reinvestment, and Capital Allocation
ROE has held in a 17–23% band for a decade with one dip (13% in FY2021, the Covid year). The recent glide from 23% → 18% is the warning bar — and it is driven less by deteriorating profits than by faster equity build-up. Net profit grew 35% from FY2023 to FY2026 (₹11,508 cr → ₹19,332 cr); equity grew 110% (₹54,372 cr → ₹1,13,999 cr). When a lender re-equitises at faster than it grows profit, ROE compresses by construction. The judgment call: BFL is choosing optionality (a lower ROE today, more capacity to absorb shocks and acquire) over headline returns. For a long-duration franchise that is the right trade — but it is the trade that explains the multiple compression risk if profit growth slows further.
Capital allocation — where the money goes
The capital-allocation picture is simple: almost every rupee earned is either paid out (rising payout ratio: 10% in FY2015 → 21% in FY2025, 20% in FY2026) or recycled into the loan book. There is no M&A engineering, no buyback program, no opaque acquisitions. The new dimension is the dividend ramp — payout doubled in three years, signalling that management sees diminishing reinvestment opportunities at current ROE versus paying shareholders. That is a tell: a lender that genuinely had 25%+ ROIC on incremental capital would not be lifting payout. Read it as management's own quiet acknowledgement that ROEs above 20% are no longer the baseline.
Per-share value
EPS has compounded ~28% a year since FY2018 (₹4.32 → ₹30.56). Book value per share has compounded ~26% (₹28 → ₹180). The book-value line is the real anchor for a lender: at ₹910 the stock trades at 5.05x reported BV, while book itself is still growing 16% a year. The arithmetic: if you assume P/B stays roughly steady and BV grows ~15%, the stock generates ~15% annualised return on book growth alone, plus the dividend yield. The multiple does most of the work today, not earnings.
Segment and Unit Economics
The dataset includes no detailed segment table (the provider's segment file is empty for this run), and BFL reports limited segment splits — the company files single-segment consolidated financials. But the public business mix is well-disclosed, so the relevant judgments can still be made.
| Book sub-segment (approx., FY2025 disclosed mix) | Share of AUM | Yield character | Risk character |
|---|---|---|---|
| Mortgages (home loans, LAP) | ~32% | Lower yield (8–10%) | Lowest risk; secured |
| MSME / business loans | ~17% | Mid-yield (12–15%) | Mid risk; partly secured |
| Consumer durable, salaried personal, BNPL EMI cards | ~24% | High yield (16–24%) | Mid-to-high risk; mostly unsecured short-tenor |
| Auto / 2-wheeler / commercial vehicle | ~12% | Mid-yield | Cyclical risk |
| Rural lending (incl. microfinance) | ~10% | High yield (20%+) | Elevated stress through FY2025–FY2026 |
| Gold loans, securities-backed, others | ~5% | Mid-yield | Low-to-mid risk; secured |
The mix matters because consolidated NIM is a weighted average. Faster growth in mortgages (lower yield) and gold loans (mid yield) plus stress on microfinance is exactly what compresses the headline financing margin from 39% in FY2023 to 33% today.
Where the economics sit: consumer durable EMI and the credit-card co-branded book remain the highest-ROA segments (low capital, very short tenor, high cross-sell). Mortgages anchor the book quality and absorb deposits. Microfinance is the marginal swing for cost of credit; its 1–2% AUM share understates its NIM impact via stage-3 movement.
Valuation and Market Expectations
Last Close (₹)
Trailing P/E (x)
Price / Book (x)
Multiple versus history
The two outlier years (FY2018, FY2021–FY2022) reflect compressed or distorted denominators — Covid base year and pre-pandemic exuberance. The cleaner reference range is FY2023–FY2026: a 30–33x P/E band. Today's 30x sits at the lower end of that band but well above pre-FY2020 levels (low 20s). The conclusion is not "cheap" — it is "fairly priced inside the recent regime, premium versus history."
For an NBFC the more honest valuation lens is P/B, not P/E:
The FY2025/FY2026 P/B values (5.6, 5.0) reflect the post-split share base; the earlier years are pre-split and not directly comparable as multiples. The right take-away: at today's ₹910, BFL trades around 5.0x book — historically near the higher end of where this stock has been priced and clearly at a premium to NBFC peers (see next section).
What the multiple implies
Consensus (35 analysts) sits at an average target of ~₹1,062 with a buy/outperform mean — implying ~17% upside from ₹910. Recent Street action: Nomura ₹1,140 (Buy), Jefferies ₹1,210 (Buy), JM Financial ₹1,125 (Buy), Kotak ₹1,025 (Buy), ICICI Securities ₹1,000 (Hold). The bear vote (Macquarie Sell at ₹747) explicitly cites the de-rating risk if NIM and ROE compression continue. The numbers say what the targets imply: the Street is paying for FY27 / FY28 earnings ~₹40 / ₹49 and a stable mid-teen ROE; if BFL delivers that, today's multiple holds; if NIM stays at 33% and ROE drifts toward 16–17%, the multiple slides — and there is real room downward to peer P/B.
The single most important valuation observation: BFL has historically commanded a P/B premium of 1.4–1.8x versus the NBFC peer average, justified by superior ROE and cleaner asset quality. With ROE now at 18% (only 1–2 points above peers) and GNPA recently above peer mean for one quarter, the premium itself is the variable to test.
Peer Financial Comparison
The peer picture in three sentences. BFL is the scale leader (~₹5.94 lakh crore market cap, more than 2.5x the next NBFC) with the cleanest asset quality (1.01% GNPA, below all peers except Shriram), but its ROE (18%) is now in the middle of the pack — Cholamandalam and Muthoot both deliver higher returns on capital. The valuation premium is real: BFL trades at 5.21x book versus an unweighted peer mean of ~4.0x; on P/E it's the highest of the group at 31.3x versus 23.7x peer mean. The premium is no longer obviously deserved: in FY2023 BFL had both the highest ROE and the best asset quality, justifying a 50%+ P/B premium; today the asset-quality lead is narrower and the ROE lead is gone. Cholamandalam matches BFL on P/B (5.5x) with comparable ROE and faster revenue growth — making it the natural value comparator and the principal threat to BFL's relative-value thesis.
What to Watch in the Financials
What the numbers confirm, what they contradict
Confirm: BFL is still one of the highest-quality consumer NBFCs in India by scale, asset quality and balance-sheet flexibility. Book value compounds in the mid-teens, dividends are real and rising, and the funding mix has held through a rate cycle. The Q4 FY2026 bounce-back (NIM 35%, profit ₹5,553 cr) proves the franchise is intact.
Contradict: The premium valuation thesis. ROE has slipped to 18% (from 22%+), NIM has fallen 600 bps from peak, GNPA touched 1.24% inside the year, and management is raising payout — all signals that the high-octane reinvestment story has shifted to a lower-but-still-good cash-compounder profile. At 31x earnings and 5.2x book, the price still embeds the old story.
The first financial metric to watch is the next quarter's financing margin. A second consecutive quarter at 34–35% would mean the Q3 FY2026 dip was a one-off and the NIM trough is behind — vindicating the multiple. A slip back below 33% would confirm structural compression and unlock the de-rating that bears like Macquarie are already pricing.