Bajaj Finance margin rebounds after Q3 dip; stock rise trails its history
Profit before tax grew 31.21% year on year, but a 5.55-point rise in the tax rate limited net-profit growth to 22.17%.
Filed 29 Apr 2026, 16:34 IST · after market close · Bajaj Finance Ltd (BAJFINANCE)
Key takeaways
- Consolidated net profit grew 22.17% year on year to Rs 5,553.30 cr, while profit before tax rose 31.21%.
- Operating margin widened 7.09 percentage points sequentially to 69.67% as expenses fell 17.45% while revenue grew 1.85%.
- The stock gained 0.75% on the first trading day after results, a smaller move than its 4.76% median absolute reaction after the last eight results.
Price around the results
Q4 margin recovery lifts operating profit
Bajaj Finance's consolidated operating profit grew 21.09% year on year, ahead of 17.06% revenue growth. Expenses rose 8.74%, so costs grew slower than revenue and operating margin widened 2.32 percentage points. Sequentially, the margin recovered 7.09 percentage points from 62.58%, taking it above the 59.41% median for the 52 Financial Services peers that had reported.
Higher tax rate muted the profit conversion
Profit before tax grew 31.21% year on year, but net profit grew 22.17% as the tax rate increased 5.55 percentage points to 25.06%. Interest expense rose 12.92%, slower than revenue, which supported the pre-tax increase. Other income contributed only 0.15% of pre-tax profit, so the result was not materially supported by non-operating income.
Margin trend turns up after two softer quarters
Operating margin fell from 69.31% in Q1FY26 to 68.75% in Q2FY26 and 62.58% in Q3FY26 before rebounding to 69.67% in Q4FY26. The sequential improvement reflects the 17.45% decline in expenses against 1.85% revenue growth. Management said Q3 included a Rs 265 cr charge related to the New Labour Codes and a Rs 1,406 cr accelerated ECL provision, while it said risk-first actions in MSME businesses kept AUM growth marginally below its assessment.
Management sets FY27 operating markers
Management said it remains confident of adding 15-17 million customers in FY27 and estimated AUM growth of 22%-24%, aided by newer businesses. It also estimated non-interest income growth of 16%-18%, net loan loss to average AUF of 1.45%-1.60% and return on assets of 4.4%-4.6%. The company said it expects a marginal moderation in NIM and completed its enterprise-wide data architecture definition to support AI adoption at scale in Q4FY26.
Initial market response was mild versus past results
The stock rose 0.75% on the first trading day after the results, after opening 1.61% higher, and was up 2.73% after five trading days. That reaction was modest against the 4.76% median absolute move after the last eight results, when the stock fell six times and rose twice. The stock was down 1.45% after 15 trading days but up 1.32% after 30 trading days.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹21,606 cr | ₹21,214 cr | +1.85% | +17.06% |
| Other income | ₹11 cr | ₹-262 cr | — | -47.27% |
| Expenses | ₹6,553 cr | ₹7,938 cr | -17.45% | +8.74% |
| Operating profit | ₹15,053 cr | ₹13,276 cr | +13.38% | +21.09% |
| Operating margin (%) | 69.67% | 62.58% | — | — |
| Interest | ₹7,398 cr | ₹7,339 cr | +0.81% | +12.92% |
| Depreciation | ₹256 cr | ₹244 cr | +4.76% | +1.39% |
| Profit before tax | ₹7,410 cr | ₹5,431 cr | +36.43% | +31.21% |
| Tax | ₹1,857 cr | ₹1,365 cr | +36.00% | +68.50% |
| Net profit | ₹5,553 cr | ₹4,066 cr | +36.58% | +22.17% |
| EPS (₹) | ₹8.79 | ₹6.40 | +37.34% | -87.85% |
Operating margin of 69.67% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.75% | +1.50% |
| Next session | +2.17% | — |
| 5 sessions | +2.73% | +2.73% |
| 15 sessions | -1.45% | — |
| 30 sessions | +1.32% | — |
Volume on the results session was 2.91× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Stage 2 assets increased by ₹331 crore while stage 3 assets decreased by ₹761 crore in Q4.
Guidance & outlook
- The Company remains confident of adding 15-17 million customers in FY27.
- The Company estimates FY27 AUM growth of 22-24%, aided by new businesses launched in recent years.
- The Company estimates FY27 non-interest income growth of 16-18%.
- The Company estimates FY27 net loan loss to average AUF in the corridor of 1.45%-1.60%.
- FY27 return on assets is estimated to be in the range of 4.4%-4.6%.
Expansion
- The Company said operating expenses increased sequentially partly because of accelerated Gold Loan branch expansion.
New initiatives
- The Company completed its enterprise-wide data architecture definition to support AI adoption at scale in Q4 FY26.
Problems & risks
- AUM growth was marginally below the Company's assessment because of risk-first actions in MSME businesses.
- The New Labour Codes led to a charge of ₹265 crore in Q3 FY26.
- BHFL's loan losses and provisions increased to ₹55 crore in Q4 FY26 from ₹26 crore in Q4 FY25.
- The Company expects a marginal moderation in NIM in FY27.
What to watch
- Whether operating margin holds near 69.67% after the rebound from 62.58% in Q3FY26.
- Whether stage 3 assets continue to fall after decreasing by Rs 761 cr in Q4FY26, even as stage 2 assets increased by Rs 331 cr.
- How FY27 performance tracks management's stated 22%-24% AUM growth and 1.45%-1.60% net loan loss to average AUF framework.