Asset quality steals the show Quick Note

Research evidence excerpt

Asset quality steals the show Quick Note

Global Markets Research

Bajaj Finance BJFN.NS BAF IN 31 July 2026

EQUITY: FINANCIALS

RatingAsset quality steals the show Remains Buy

Target price INR 1,140 RemainsQuick Note

Closing price INR 1,054 29 July 20261QFY27 net profit beats our and Bloomberg consensus estimates by 3% and 7%,

respectively

• Bajaj Finance’s (BAF) 1QFY27 reported net profit of INR60.8bn (up 28% y-y) beat our Research Analysts

and consensus estimates by 3% and 7%, respectively. Operating profits were in line

with our estimates, but credit cost beat our and consensus estimates by 9%. India Financials

Shreya Shivani - NFASL

• Management has created a macroeconomic provision of INR2.96bn, excluding this shreya.shivani@nomura.com

credit cost stood at 1.3%, which is the lowest since COVID-19. Overall, we note that +91 22 403 74804

all our covered NBFCs (that have reported 1Q27 results) have reported a net profit Ankit Bihani - NFASL

beat on our estimates. Fig.4 ankit.bihani@nomura.com

+91 22 403 74135

Strong asset quality performance; management will watch for another quarter

before any guidance revision Shreyas Pimple - NFASL

shreyas.pimple@nomura.com

• Gross stage 2 (%) at 0.91% is the lowest since COVID-19, while gross stage 3 (%) +91 22 403 74029

has recovered to 0.96% after five quarters. The Provision Coverage ratio on stage 3

has now been around 60% for three quarters, and management aims to keep it at

these levels going ahead also.

• Despite the encouraging trends, management still highlighted global events related

uncertainty and monsoon fears in India. It plans to observe trends for another quarter

before making any revision to guidance.

Cost of funds movement well controlled; management expects it to be rangebound

with a slight upward bias