What Will Fuel Bajaj Finance’s Next Big Leap?

SYNOPSIS: Bajaj Finance, with Rs. 4.62 trillion AUM and 110 million customers, posted 23% profit growth in Q2 FY26. Expanding MSME, personal, and digital lending to drive its next growth phase.

Bajaj Finance has emerged as one of India’s most influential non-banking financial powerhouses, delivering strong stock returns and earning a reputation for innovation-led lending. As India moves deeper into a credit-expansion cycle supported by rising incomes, digital adoption, and the formalisation of small businesses, the company appears well-positioned to ride this momentum. The next three years could be crucial, and several structural drivers indicate why Bajaj Finance may enter another phase of accelerated growth.

Bajaj Finance Ltd, with a market capitalization of Rs. 6,27,786.20 crore, is trading at Rs. 1,009.30 per equity share, up by 0.9 percent from its previous day’s close price of Rs. 1,000.30 per equity share.

The leading NBFC stock, Bajaj Finance, has demonstrated strong performance over the years. It has delivered an impressive 52.66 percent return in just one year, showcasing its robust momentum in the market. Over a five-year period, the stock has more than doubled investor wealth with returns of 110.06 percent, reflecting consistent growth and strong business fundamentals.

Future Growth Drivers for Bajaj Finance

One of the biggest triggers for future growth is Bajaj Finance’s aggressive push to scale its customer franchise. The company already services over 110 million customers, and the ambition to onboard the next 100 million could significantly expand its lending universe. With omnichannel distribution, partnerships, and strong digital onboarding pipelines, large-scale customer acquisition will act as a key volume growth enabler.

MSME financing remains an underpenetrated opportunity in India. Bajaj Finance is sharpening its focus on GST-linked and Udyam-registered small businesses, targeting them with a wider suite of products, offering almost ten offerings under its MSME umbrella. If executed strongly, this segment could evolve into one of the company’s largest growth pillars, enabling a meaningful jump in assets under management over the medium term.

The company is expanding its personal loan offerings to cater to diverse demographic and income brackets across regions. Fast disbursement, wide ticket-size range, and digital journeys provide scale and profitability. At the same time, auto lending is being positioned for a ramp-up; with an emphasis on low credit cost and a payments-integrated lending framework. Together, these products could unlock demand-led credit expansion.

Bajaj Finance is rapidly evolving from a traditional NBFC into a full-stack digital financial platform. Heavy investment in AI for underwriting, customer behaviour modelling, fraud detection, and operational efficiency is expected to boost productivity and customer engagement. Multi-cloud architecture, strengthened security frameworks, and digital distribution through app-based solutions further reinforce its competitive lead. Tech-led execution may be the strongest differentiator over the next decade.

While growth is critical, the company is also returning to fundamental lending discipline by emphasising borrower ability, stability and intent to repay. A renewed push towards prudent underwriting and univariate risk-based decisioning aims to maintain asset quality even as loan volumes expand. Stable asset quality has historically supported Bajaj Finance’s valuation premium, making disciplined credit practice vital for sustainable compounding.

The company is diversifying aggressively into emerging business lines such as leasing, multi-product distribution, and green financing. Solar and EV financing, in particular, aligns with India’s energy transition, offering a structural long-term opportunity with minimal competitive saturation today. This gives Bajaj Finance an early-mover advantage in a category that could scale rapidly over the coming years.

Q2 Highlights

The company delivered AUM growth of Rs. 20,811 crore to Rs. 4.62 trillion and booked 12.17 million new loans. Bajaj Finance added over 4 million new customers in the quarter and crossed a customer franchise of 110.64 million, signalling strong execution capacity even in a competitive credit environment.

About the Company

Bajaj Finance Limited, based in Pune, India, is a deposit-taking non-banking financial company and a subsidiary of Bajaj Finserv Ltd. It provides a wide range of financing solutions, including personal, gold, home, car, two- and three-wheeler loans, and loans for consumer electronics, furniture, and e-commerce purchases. 

The company also offers lending to MSMEs, SMEs, and professionals, along with developer finance, lease rental discounting, loans against property, mutual funds, insurance policies, and shares. Additionally, it provides commercial and rural lending, microfinance, auto financing, car financing, broking and margin trade services, and distributes life, health, and general insurance products. Incorporated in 1987, it was formerly known as Bajaj Auto Finance Limited until 2010.

Financial Outlook

In Q2 FY26, the company reported net interest income of Rs. 10,785 crore, an increase by 22 percent from Rs. 8,838 crore last year. Net profit increased by 23 percent to Rs. 4,948 crore from Rs. 4,014 crore, supported by strong lending volume and improving operating leverage.

Over the past three years, the company has demonstrated strong growth, achieving a revenue CAGR of 30 percent, a profit CAGR of 33 percent, and stock price CAGR of 15 percent, reflecting both its operational performance and market confidence.

A return on equity (ROE) of about 19.2 percent and a return on capital employed (ROCE) of about 11.4 percent demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 34.4x higher as compared to its industry P/E 21.2x.

Conclusion

Bajaj Finance enters the next three years with scale, technology, and product depth on its side. Customer acquisition, MSME lending, personal and auto loan expansion, AI-driven efficiency, and new-age financing segments together form a robust growth runway. If economic conditions remain supportive and risk management discipline holds firm, the company may be heading toward its most transformative phase yet, making its next leap one to watch closely.

Written by Akshay Sanghavi

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