Shares of Bajaj Finance delivered a strong performance on Friday, July 31, surging beyond 7% to hit a fresh all-time high after the company reported a better-than-expected performance for the June quarter.
The sharp rally added significantly to investor wealth and pushed Bajaj Finance’s market capitalisation beyond ₹7 lakh crore for the first time. On the BSE, the stock touched ₹1,128.80 during the session. The latest rally reflects growing investor confidence that the non-banking financial company (NBFC) can sustain strong loan growth while keeping credit costs and bad loans under control.
The immediate trigger was Bajaj Finance’s Q1 FY27 earnings. The company reported a 27.4% year-on-year rise in profit attributable to owners to ₹5,986 crore for the quarter ended June. Net interest income (NII), a key measure of lending performance, increased 23% to ₹12,571 crore.
The numbers were supported by continued expansion in the company’s loan book. Assets under management (AUM) grew 24% year-on-year to ₹5.47 lakh crore. During the quarter, Bajaj Finance added ₹36,969 crore to its loan book and disbursed 16.13 million new loans. Its customer franchise also expanded to 124.43 million.
For investors, however, the most encouraging part of the results was not just growth but the improvement in asset quality.
Bajaj Finance’s gross non-performing assets (GNPA) declined to 0.96% from 1.03% a year earlier. Net NPA also improved to 0.39% from 0.50%. Loan losses and provisions stood at ₹1,993 crore, including an additional ₹296 crore provision made as a precaution against macroeconomic risks.
Excluding that additional provision, loan losses fell 14% year-on-year. The loan loss ratio also improved to 1.31% from 1.87% in the year-ago quarter. The company said credit performance across recent loan vintages continued to improve.
That combination of growth and improving asset quality appears to have changed the market’s view of Bajaj Finance. Concerns about credit costs and stressed loan segments had weighed on the NBFC in previous periods. The latest results, however, suggest that the company is managing those risks while continuing to expand.
The company’s profitability metrics also remained strong. Annualised return on assets improved to 4.7% from 4.5% a year earlier, while return on equity rose to 20.4% from 19%. Capital adequacy remained comfortable at 20.9%, with Tier-I capital at 20.01%.
Brokerages have responded positively to the earnings. Motilal Oswal upgraded Bajaj Finance to ‘Buy’ from ‘Neutral’ and raised its target price to ₹1,300. The brokerage expects the company to enter a phase of structurally stronger earnings growth, supported by broad-based loan expansion, stable margins, improving asset quality and lower credit costs.
JM Financial retained its ‘Buy’ rating and raised its target price to ₹1,250 from ₹1,220. HDFC Securities also retained its ‘Buy’ recommendation with a target price of ₹1,100, although it cautioned that the stock’s elevated valuation could restrict near-term upside.
Reuters reported that at least six brokerages raised their target prices after the results. Analysts pointed to falling bad loans and stronger loan growth as key reasons for their improved outlook. CLSA noted that the calculated net slippage ratio fell 90 basis points year-on-year to 1.2%, while Nomura highlighted a decline in gross Stage-2 assets to their lowest level since the Covid-19 pandemic.
Bajaj Finance is also preparing for its next phase of technology-led expansion. Under its FINAI transformation programme, the company plans to expand its dedicated artificial intelligence team to 400 employees during FY27 and add another 300 people to its digital platforms unit.
AI is already being used in areas such as customer acquisition, underwriting, collections and servicing. The company has deployed 62 AI agents and 23 agentic AI use cases, while AI-generated loan offers have increased sharply.
For FY27, Bajaj Finance expects to disburse 60-62 million new loans and add 18-20 million customers. It also plans to open 150-175 new physical locations and expand its gold loan business.
The question now is whether Bajaj Finance shares still offer enough upside after the latest rally. The fundamentals remain strong, but the stock’s valuation has also moved higher following its record-breaking run. Analysts broadly remain constructive because of the company’s earnings growth, improving asset quality and strong franchise, while acknowledging that much of the optimism is already reflected in the share price.
In short, Bajaj Finance has given investors a powerful combination of growth, profitability and improving credit quality. The next challenge will be sustaining that momentum without allowing valuations or credit risks to get ahead of fundamentals.