Bajaj Finance shares fell nearly 3% on Wednesday, October 21, despite the non-banking financial company (NBFC) reporting a 29% year-on-year increase in net profit for the September quarter. Investors weighed the lender’s strong earnings against concerns about rising interest rates, regulatory changes and emerging stress in some loan categories.
The stock declined to around ₹929.20 on the National Stock Exchange (NSE) during morning trade. The fall came after Bajaj Finance announced its results for the second quarter of the 2026-27 financial year (Q2 FY27) on October 19.
The company reported consolidated net profit of ₹6,367 crore for the July-September quarter, compared with ₹4,948 crore in the same period last year. Net interest income (NII), which measures the difference between interest earned and interest paid, rose 24% to ₹13,335 crore from ₹10,785 crore a year earlier.
Despite the strong numbers, investors remained cautious about the outlook for earnings and profitability. Several brokerages retained positive ratings, but highlighted risks that could affect the company’s performance in the coming quarters.
Bajaj Finance’s assets under management (AUM) grew 26% year-on-year to around ₹5.85 lakh crore as of September 30, 2026. The company added ₹37,680 crore to its AUM during the quarter, reflecting continued demand across its lending businesses.
Its customer franchise expanded 16% to 128.85 million, with 4.42 million customers added during the quarter. The lender booked 13.45 million new loans, up 11% from 12.17 million in the corresponding period last year.
The results show that the company continues to expand its lending operations and attract customers. However, investors are also examining whether this growth can be sustained without putting pressure on margins or weakening asset quality.
Management has raised its loan growth guidance for FY27 to 26-27%, from the earlier range of 22-24%. The revised outlook signals confidence in demand, although the company must continue to manage credit costs and funding expenses.
The decline reflects concerns beyond the headline profit figure. Rising interest rates could increase borrowing costs for Bajaj Finance, potentially putting pressure on its net interest margins if lending rates do not adjust sufficiently.
Regulatory uncertainty is another factor. Changes affecting flexi-loan products and insurance distribution fees could influence the company’s future income. Brokerages are monitoring how these developments may affect profitability.
There are also signs of stress in the gold loan segment. Bajaj Finance has reported a rise in loans overdue by more than 30 days, with much of the increase linked to short-term gold loans. The company has stopped offering these short-term products.
Although overall delinquencies remain relatively low, the development has drawn attention because gold-backed lending has expanded rapidly across the financial sector. Higher inflation and pressure on household finances could also affect borrowers’ repayment capacity.
These concerns have prompted investors to look beyond quarterly profit growth when assessing the stock.
Jefferies maintained its Buy rating on Bajaj Finance but cut its target price to ₹1,230 from ₹1,280 per share. The brokerage said quarterly profit was broadly in line with expectations and continued to view the company as a strong long-term growth story.
It expects profit to grow at a compound annual growth rate of around 25% between FY26 and FY29. However, it flagged the need to monitor developments in flexi-loan products, insurance fees and stressed gold loans.
Nomura also retained its Buy rating, with a target price of ₹1,270 per share. It said net profit was broadly in line with its estimate, although it was slightly below the wider market consensus.
Nomura highlighted healthy lending growth and lower-than-expected credit costs. At the same time, it warned that a rising interest-rate environment could create headwinds for net interest margins. The brokerage trimmed its earnings estimates by 2-3%.
Domestic brokerage 360 One WAM upgraded Bajaj Finance from Hold to Buy and set a target price of ₹1,150 per share.
It cited strong AUM growth, positive demand and the company’s improved risk-reward profile following the recent share price correction. However, lower-than-expected fee income had affected pre-provision operating profit and net profit relative to its estimates.
The brokerage also considered the potential impact of a capital infusion and warrant conversion during FY27-28 on future book value and return ratios.
Bajaj Finance’s performance will depend on its ability to maintain loan growth, control funding costs and manage emerging credit risks. Its large customer base and diversified lending operations remain strengths, but margin pressure and regulatory changes could influence future earnings.
The fall in Bajaj Finance shares despite a 29% rise in profit underlines how markets assess future risks alongside past performance. Brokerages remain broadly positive, but the company’s next results will be important in determining whether strong growth can translate into sustained profitability.