Should you buy Bajaj Finance shares after announcing its Q3 results?

Synopsis: Shares of Bajaj Finance Limited stayed in focus after Q3 FY26 PAT fell 18% QoQ, dragged by higher provisioning. Despite muted numbers, brokerages remained bullish, citing one-off impacts, improving asset quality, moderating credit costs, and strong long-term earnings visibility.

The shares of this company, which is mainly engaged in the business of lending and has a diversified lending portfolio across retail, SME and commercial customers with a significant presence in urban and rural India. It also accepts public and corporate deposits and offers a variety of financial services products to its customers. It had its share in the news following the company reporting muted results, but brokerages still remained bullish on the stock.

With the market cap of Rs 6,00,096 crore, the shares of Bajaj Finance Ltd are trading at Rs 964 and are trading at a PE of 32.9, whereas its industry PE is at 19.4.The shares have given a return of 74% over the last 5 years. 

About the Q3 Result

The net interest income stood at Rs 11,317 crore in Q3 FY26, up by 21% from Rs 9,382 crore in Q3 FY25 However, the PAT fell by about 6 per cent on a YoY basis when you compare the Q3 FY26 profit at Rs 4,066 crore to Rs 4,308 crore in Q3 FY25 and on a QoQ basis has fallen 17 per cent from Rs 4,948 crore in Q2 FY26. 

In Q3 FY26, Bajaj Finance reported continued balance-sheet expansion, with AUM rising 22% YoY to Rs 4,84,477 crore as of December 31, 2025. Excluding the impact of accelerated ECL provisioning, AUM growth stood at 22%, reflecting strong underlying momentum. New loans booked increased 15% YoY to 13.90 million, highlighting sustained demand across lending products despite a tighter risk environment and higher provisioning during the quarter. The Net NPA stood at 0.47%, around similar range of 0.48% in Q3 FY25

Bajaj Housing Finance Ltd (BHFL), where Bajaj Finance has an 86.70% registered robust balance sheet growth, with AUM increasing 23% YoY to Rs 133,412 crore. The home loan business continued to be the key driver of growth, increasing 18% YoY, while the higher-yielding businesses of loan against property (32% growth) and lease rental discounting (39% growth) outpaced the core business. Approvals and disbursements also increased significantly, reflecting continued traction and geographic reach in 178 locations.

BHFL continued to maintain a comfortable liquidity position with an Rs 2,730 crore cushion, while the cost of funds eased to 7.3%, driven by improved rate transmission and a favourable borrowing mix. Asset quality remained strong, with a GNPA of 0.27% and an NNPA of 0.11%, despite an increase in provisions to Rs 56 crore. Loan loss provisions remained manageable, reflecting prudent lending practices despite the sharp growth in the portfolio.

The bottom line improved substantially, with NII growing 19% YoY.. Returns remained healthy, with an ROA of 2.3% and an ROE of 12.3%, while a robust capital adequacy ratio of 23.15% (Tier-1: 22.69%) provided ample buffer to support future growth.

Brokerage View

Jefferies held a Buy rating, attributing the Q3 profit miss to one-off factors, Rs 14 billion provisioning and labour law changes, instead of underlying issues. After adjusting for the same, profits grew 23% YoY, which was in line. With improving asset quality, stabilising credit costs, and management guidance remaining unchanged, Jefferies forecasts a 24% profit CAGR over FY26-28, retaining Bajaj Finance as one of its top picks.

Morgan Stanley continued to rate the stock overweight, emphasising that credit costs are soon to decline materially as new stressed loan additions slow down. The broking pointed out that coverage has improved, resulting in near-term estimate revisions downward, but underlying earnings views remain unchanged. With an FY26-28 EPS CAGR of 25%+, MS views the current cycle as a phase of earnings normalisation, rather than structural problems.

JPMorgan upgraded the stock to Overweight with a target price of Rs 1,150, emphasising a visible improvement in the asset quality trend and evidence of normalisation of the initial asset quality concerns. It also noted that current valuations are near 1 standard deviation below long-term averages following the recent de-rating, providing a favourable risk-reward setup. The broking forecasts 22-24% recurring PPOP/PAT CAGR over FY26-28.

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