Bajaj Finance Ltd. reported strong financial results for Q1 FY26, with a sharp rise in profit, assets under management, and customer additions. Yet, despite these impressive numbers, the stock tumbled around 6% on July 25, 2025, as market sentiment turned negative due to rising credit costs and concerns over asset quality in specific segments.
Bajaj Finance Q1 FY26 Results: Profit Surges, AUM Crosses ₹4.4 Lakh Crore
For the quarter ended June 30, 2025, Bajaj Finance reported a 22% year-on-year increase in net profit, rising to ₹4,765 crore compared to ₹3,912 crore a year earlier.
Net interest income (NII) also surged 22% YoY to ₹10,227 crore, reflecting strong lending activity. The company disbursed 13.49 million new loans and added 4.69 million new customers, leading to a 25% jump in assets under management (AUM) to ₹4.41 lakh crore.
While core business growth remains strong, credit costs rose by 26% to ₹2,120 crore, translating to a credit cost of approximately 2.02%, which raised eyebrows in the market. Gross NPA stood at 1.03%, and net NPA at 0.50%, indicating a marginal deterioration in asset quality.
Bajaj Finance Stock Falls 6% – Why the Market Reacted Negatively
Despite the robust financial performance, Bajaj Finance’s stock price dropped over 6% intraday, falling to around ₹898 from the previous close of ₹958.95. This sharp correction puzzled many retail investors.
The sell-off was triggered mainly by rising credit provisioning and stress in the MSME (Micro, Small & Medium Enterprises) and 2W/3W (two-wheeler and three-wheeler) lending segments. According to analysts, investors are growing wary of early signs of asset quality pressure, especially in unsecured and vehicle financing categories.
Adding to the caution, JPMorgan downgraded the stock from “Overweight” to “Neutral”, citing a deterioration in MSME loan quality and rising mortgage attrition. The firm also trimmed its target price to ₹970 from ₹980. Other global brokerages, including UBS, Jefferies, Macquarie, and Bernstein, flagged similar concerns about rising credit costs and provisioning trends.
Broader Market Impact and Bajaj Finserv’s Reaction
The negative sentiment around Bajaj Finance weighed on the broader indices. The Nifty 50 opened lower near 24,940, with Bajaj Finance’s 5–5.1% drop contributing significantly to the weakness. Sensex, mid-cap, and small-cap indices also took a hit in early trade.
Bajaj Finserv, the holding company of Bajaj Finance, also experienced a drop of around 1.4%, trading between ₹2,032 and ₹2,047 on July 24. Though this fall was relatively milder, it reflected broader market concerns ahead of Bajaj Finserv’s own Q1 FY26 results announcement on July 25. The stock currently trades about 4.8% below its 52-week high of ₹2,134.45, reached in April 2025.
What Investors Should Know – Outlook and Risks
While Bajaj Finance continues to show strong fundamentals, concerns about asset quality and rising provisioning have caused short-term volatility. Here are the key takeaways:
- Earnings strength: Net profit and NII grew 22% YoY, with record AUM and customer additions.
- Valuation reset: JPMorgan’s revised target of ₹970 suggests limited upside in the short term.
- Risks ahead: Provisioning and stress in MSME and vehicle segments are likely to impact growth in Q2 onward.
- Outlook: The long-term story remains strong, but near-term movement depends on clarity over credit trends.
Analysts advise a wait-and-watch approach, suggesting that while the stock dip may offer a buying opportunity, caution is warranted until credit metrics stabilize. Bajaj Finserv, too, may experience similar investor reaction post its Q1 results.
Conclusion
In summary, Bajaj Finance’s Q1 FY26 results highlight its operational strength, but rising credit concerns have spooked the market. Even as the company grows in size and customer base, investor focus is now squarely on how it manages asset quality in a rising interest rate and uncertain macro environment.
Bajaj Finserv’s Q1 earnings, due on July 25, are likely to provide further insight into the group’s overall performance and may influence near-term sentiment for both stocks.
F.A.Q.
– Why did Bajaj Finance shares fall despite strong Q1 results?
Although Bajaj Finance posted a 22% rise in net profit and strong growth in AUM and NII, the market reacted negatively due to rising credit provisioning and asset quality concerns, especially in MSME and 2W/3W lending segments.
– What was Bajaj Finance’s net profit in Q1 FY26?
The company reported a net profit of ₹4,765 crore for the quarter ended June 30, 2025, a 22% increase from ₹3,912 crore in the same quarter last year.
– What caused analysts like JPMorgan to downgrade the stock?
JPMorgan downgraded Bajaj Finance from “Overweight” to “Neutral” due to concerns over rising credit costs, deteriorating MSME loan quality, and mortgage attrition, which could impact future earnings stability.
– What is the current credit cost and NPA level for Bajaj Finance?
The credit cost stood at ~2.02%, with gross NPA at 1.03% and net NPA at 0.50%, indicating a slight rise in bad loans that worried investors and analysts.
– Is Bajaj Finance still a good investment after the recent fall?
While the company’s long-term fundamentals remain strong, short-term risks related to asset quality and provisioning remain. Most brokerages suggest caution and advise waiting for clarity on credit trends before making investment decisions.
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