Bajaj Finance Q1 Profit Jumps 22%, But MSME Loan Stress Worries Investors

Bajaj Finance reported a strong performance for the quarter ending June 30, 2025 (Q1 FY26), with net profit rising 22% to ₹4,765 crore compared to ₹3,912 crore in the same quarter last year. The growth came mainly from higher demand for loans, which pushed the company’s net interest income (NII) up by 22% to ₹10,227 crore.

The company’s assets under management (AUM) grew by 25% to ₹4.41 lakh crore. It gave out 13.49 million new loans during the quarter—23% more than last year. Bajaj Finance also added 4.69 million new customers, growing its total customer base to 106.51 million, up 21% year-on-year. Total revenue rose by 21% to ₹19,524 crore, and pre-provision operating profit grew 22% to ₹8,487 crore.

However, not all the news was good. The company also reported a 26% rise in loan losses and provisions, which stood at ₹2,120 crore for the quarter. This pushed the annualized credit cost to 2.02%. The company’s gross NPA (non-performing assets) increased to 1.03%, up from 0.86% earlier. Net NPA rose to 0.50%, compared to 0.38% before. The most stress was seen in MSME (small business) and 2/3-wheeler loans, which the company said could stay weak in the coming months.

Despite strong profits, the stock fell by nearly 6% on July 25, touching an intraday low of ₹898.10. Investors were worried about the rising stress in its loan book. Global brokerage JP Morgan downgraded the stock from ‘overweight’ to ‘neutral’ due to the credit risk. Analysts also expect AUM growth to slow to around 23–25% in FY26, and for credit costs to stay high, which may affect short-term stock performance.

In short, while Bajaj Finance showed strong growth in profits, revenue, and customer numbers, the rising pressure in small business and vehicle loans has made the market cautious. The fundamentals remain strong, but investors are keeping a close eye on asset quality.