Bajaj Finance Q2 FY26 Performance Analysis & Market Reaction

Bajaj Finance Ltd. experienced a significant 8% correction in its share price on November 11, following the announcement of its Q2 FY26 financial results. The market's negative reaction was primarily driven by a downward revision in management's full-year Assets Under Management (AUM) growth guidance, which overshadowed strong underlying profit metrics. Core Q2 FY26 Financial Performance The company reported robust, in-line results for the quarter ending September 2025: Net Interest Income (NII): Grew 22% year-on-year to ₹10,785 crore. Net Profit: Increased 23.3% year-on-year to ₹4,948 crore. Net Interest Margins (NIMs): Remained stable compared to the previous year. Management Guidance and Asset Quality Concerns Despite strong profitability, the management commentary triggered the sell-off: AUM Growth Guidance Cut: Full-year AUM growth guidance was reduced to 22%-23%, down from the earlier projection of 24%-25%. This revision is attributed to slower growth in the mortgage and SME segments, with SME growth now forecast at 10%-12%. Credit Costs: Management indicated that credit costs are expected to be at the higher end of the 1.85%-1.95% guidance range. Asset Quality Pressure: The company reported a sequential deterioration in asset quality. Gross NPA: Increased to 1.24% (from 1.03% in the previous quarter). Net NPA: Increased to 0.6% (from 0.5% in the previous quarter). Investment Rationale: Morgan Stanley noted the guidance cut may disappoint investors short-term but views any weakness as a buying opportunity. HSBC forecasts a 28% EPS CAGR for FY26-28, citing an eventual recovery in AUM growth and credit cost normalization.