Bajaj Finance call, India, October 2026: marginally more margin compression expected

Bajaj Finance expects its lending margin to narrow slightly more than it had guided

On its call for the second quarter of fiscal year 2027 (FY2027), an executive of Bajaj Finance said the company expects marginally more compression in net interest margin (NIM) than its prior guidance of 10 to 15 basis points. NIM is the gap between what a lender earns on loans and what it pays for its funds. The executive said first-half NIM was down 5 basis points against the beginning-of-year basis cited by management. Analysts asked about the margin outlook as the cost of funds rises. Management gave a partial answer.

Bajaj Finance kept its growth and return guidance

• An executive said the company maintains medium-term growth guidance of 23% to 25% year over year, with growth allowed to be lower in one year and higher in another.
• An executive said the company maintained its long-term annual growth guidance of 20–25%, noting that individual years may grow 27% or 23%.
• Management said it will hold to long-term guidance of 23–25% profit growth and 19–21% return on equity, a measure of profit relative to shareholders' capital.
• The company said it targets a balance-sheet scale of 11 lakh crore by fiscal year 2030.
• It expects its micro, small and medium enterprises (MSME) business to begin delivering double-digit growth momentum in the second half of FY2027.

Bajaj Finance expects credit costs to stay in its earlier range and lowered its leverage corridor

• An executive said the company expects credit costs in the second half of FY2027 to remain in the same corridor as previously indicated. The company said it is on track for FY2027 to be one of its lowest credit-cost years in four years.
• The company lowered its leverage corridor for future capital raises from 5.5–6x to 5–5.5x. Leverage measures how much a company borrows relative to its own capital. The company said its current leverage is 5.1x.
• The chief financial officer said Bajaj Finance is working to offer a 12-month gold-loan scheme with monthly and quarterly interest-payment options.
• Analysts asked whether gold-loan delinquencies are worsening and why the company uses credit overlays alongside its expected credit loss (ECL) model. Management gave partial answers to both.