Bajaj Finance Ltd Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Viral Shah - IIFL Capital. - Analyst : Yeah. Thank you for the opportunity. Rajeev, I have three questions. But first, to begin with, I would say, it's glad to have you back, but just wanted to understand what have been the learnings of, say, this transition process we had planned, I would say, two to three years back? And what is it that incrementally you have in mind as to how to approach this, say, two, three years down the line, so that we see a more smoother transition. That would be my first question. And then I have two to three questions on the business, if I may.

Question: Viral Shah - IIFL Capital. - Analyst : Get it -- very fair, Rajeev. My second question is more for Sandeep. Sandeep, on the financial front, and I look at, say, your -- the cost of fund guidance that you have given, say, now 15 to 20 bps is the reduction that you anticipate for the year, given that's the movement that we are seeing from 4Q to 1Q do we now anticipate, say, a 5 to 10 bps kind of a NIM expansion on a full year basis versus flat earlier?

Question: Viral Shah - IIFL Capital. - Analyst : Got it. And secondly, Sandeep, on the, say, growth guidance numbers on the noninterest income and also the credit cost for the full year are they broadly still -- do you retain them? Or how do you see them panning out?

Question: Viral Shah - IIFL Capital. - Analyst : Got it. And my last question, Rajeev, is for you. So on the SME portfolio, you pointed out that we are seeing meaningful sales. Can you point out which subsegment within this issuing this? Is it a unsecured business loans or LAP or term loans, and are we also seeing say, percolation of stress from unsecured to secured segments both in gold loans and home loans?

Question: Viral Shah - IIFL Capital. - Analyst : Got it. Makes sense., Raj. Thank you so much.

Question: Viral Shah - IIFL Capital. - Analyst : Got it, very clear. Thank you so much and all the very best.

Question: Piran Engineer - CLSA Ltd - Analyst : Yeah, Congrats on the quarter. Actually, my question was kind of answered your where you mentioned that it's more to do with economic slowdown. But just to get more clarity on unsecured business loans, are these -- how do I think about leverage at that promoter level? Because you might have taken a business loan from you but a personal loan from some bank, et cetera. How do you think about that? And like any statistics you can share there?

Question: Piran Engineer - CLSA Ltd - Analyst : Okay. Okay, sir. Fair enough. And also on the B2C side, earlier we used to share metrics on what percentage of the portfolio has 3 or more lenders 7%, 8%, sorry.

Question: Piran Engineer - CLSA Ltd - Analyst : A 7%, 8% pre-COVID?

Question: Piran Engineer - CLSA Ltd - Analyst : No, no. It was 5.5 is down to.

Question: Piran Engineer - CLSA Ltd - Analyst : Yes. That we had published. Perfect.

Question: Piran Engineer - CLSA Ltd - Analyst : You're, yeah.

Question: Piran Engineer - CLSA Ltd - Analyst : Okay. Fair enough. And just lastly, on growth or just in terms of scale-up, -- in car loans, like what percent I'm just trying to think about our distribution reach right now in car loans.

Question: Piran Engineer - CLSA Ltd - Analyst : Oh yeah, I mean, I thought you said the loan book is very small. I just want to get a sense of the distribution reach and like how big we can become over the medium.

Question: Piran Engineer - CLSA Ltd - Analyst : Got it. Okay. That's it from my end. Okay, that's it from my end. Thank you and wish you all the best.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Yes. sorry, again, touching upon the leadership transitioning. You indicated that the Board has indicated that over 6 months, you need to give a detailed succession planning -- but at the same point in time, you indicated that to avoid any ambiguity, it will be closer to FY '28 wherein the plans will be rebid. Is that correct? So maybe over like 2.5 years, it will just be again like preparing the transitioning. But last time, maybe three years back, we made it public in terms of how it is happening. But I think this time, it will be more internal and it will not be made public. Is that the correct reading?

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Okay. But anything with respect to the corporate structure, maybe it was quite multi layered in terms of, like, say, a lot many changes have happened. So would we.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : No changes in terms of the corporate structure, which has been planned or maybe which was indicated over the last couple of years.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Yeah, sure. And secondly, with respect to MSME, so you indicated maybe that's going through this stress. But when we look at it in terms of the recognition where we are -- and provisioning also, I was just looking at it maybe in terms of the coverage ratios across Stage 2 and Stage 3 is coming off. I believe that it's because the newer pool, which is sitting in that and which would call for a lower provisioning. But then maybe with this thing of the portfolio, do we see again the provisioning requirements going up in the MSME because of the stress we had indicated.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Fair enough. So as this restructuring is in SME because that's the only SME and commercial lending is the only place where in provisioning coverage is coming up. I believe commercial lending is more of a recovery, but MSME is because of restructuring.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Okay. Got it. Perfect. Yeah. Thanks. Thanks a lot, yeah.

Question: Kuntal Shah - Oaklane Capital - Analyst : Hi, thanks for taking my call and Rajeev, thanks to have you back on the call. So we heard Bajaj has start up with that and which was supposed to accelerate our customers' franchisee and increase the reach also. And Alaris also talked about 200 million kind of numbers targeted. But when you look at Y-o-Y, our customer addition momentum has slowed down and so as cross-selling, I believe from 3.8% to 3.2% and 3.2% to 3.1%. Can you throw some light on that? And second is, you said AI is a transformative year this year, 2026, but we see insurance, AMC, healthcare, et cetera, sitting in parent, broking, distribution, lending, sitting in your company. So how does this work AI strategy in terms of synergies, cost reduction, cross-sell. Shouldn't it be a common stack and come and outcomes? And how do you achieve that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 1:00PM, BJFN.NS - Q1 2026 Bajaj Finance Ltd Earnings Call

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Partially but common unified super app was what I think makes sense from peck perspective.

Question: Kuntal Shah - Oaklane Capital - Analyst : Does it mean you will tie up with more fintech, which are a lot of customers in payments and moving money from.

Question: Kunal Shah - Citibank Cameroon SA - Analyst : Thank you, thank you.

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Yeah, hi, good evening and thanks for taking my question. Good to have you back, Rajeev. So the first one is going back to SME. Can you give some color on the book, how much of it is unsecured, how much of it is professional loans? And is -- are those the parts where you're seeing basically maximum stress Also, what are the credit actions you have taken? So any examples you can give that will help us understand what's happening. And the third is just -- is it going to remain slow or there are subsegments or some other segments there which can accelerate -- which you can accelerate going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 1:00PM, BJFN.NS - Q1 2026 Bajaj Finance Ltd Earnings Call

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Okay. How much would be the total unsecured in this book? In the INR50,000

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : The entirely.

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Sorry, go ahead. Sorry, please go ahead. Sorry. Sir, the other observation I had is that since it is mostly unsecured, typically when you see an unsecured GSI, GSI provisioning, it jumps from 40%, 50% in GSI to around 70%, 80% because a lot of it flows forward. But in MSME, it's 42 going to 49%. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 1:00PM, BJFN.NS - Q1 2026 Bajaj Finance Ltd Earnings Call So there's not much provision buildup that's happened in the book when it's flowed forward from GSI to GSI. So is it safe to say that, that buildup will happen given that most of the forward flows are unsecured.

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Okay. Got it. Got it. The second question is on -- the second question is on growth. So if I put all the comments together. So a BFL has also indicated slightly slower growth this year. Obviously, MSME is growing -- 2 or 3 wheelers will remain slow. So are there any other segments where you're looking to pick up slack? Or do you think 26 by nature is going to be a slow year and then you get back to your medium-term growth trajectory in '27. So '26, you will probably underachieve or be lower than that growth trajectory. So how are you thinking about it.

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Okay, thanks so much.

Question: Chintan Joshi - Autonomous - Analyst : Hi, good evening. Thanks for taking my question. So, Can I come back on the NII, like if I see this quarter, 4.8% growth in NII or 5.9% growth in AUM. So implicitly, it's a 10 basis point NIM decline. You highlighted this mutual fund investment. Is that the liquidity buffer, which has gone down 20% that's been talked in that mutual fund investment that's causing this NIM decline? And how long will you hold that on the book. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 1:00PM, BJFN.NS - Q1 2026 Bajaj Finance Ltd Earnings Call

Question: Chintan Joshi - Autonomous - Analyst : And how long will you hold this position? Is it in that was special.

Question: Chintan Joshi - Autonomous - Analyst : Sandeep, why should this go back up because if it becomes liquidity buffer, again, it will go into GSEC, which is also lower NIM. So why should there be a -- is it just a denominator.

Question: Chintan Joshi - Autonomous - Analyst : Then the second one was on MSME. You gave some numbers 2.5 went to 11 and then came down to 7000 talking about? Are these monthly disbursements you're talking about on MSME.

Question: Chintan Joshi - Autonomous - Analyst : Monthly disbursements, okay. And can you -- do you have a view on why this has happened that because we haven't heard any of the other kind of banks talk about it. You're talking about it as a clear pain point not just for yourself but also the industry. So just wondering if you have some visibility on like is it the customer group that NBFC target versus banks? Or is it something specific that is -- that you are seeing.

Question: Chintan Joshi - Autonomous - Analyst : I mean it's primarily unsecured. So I suppose that's why the banks aren't talking about it. But like what do you see as the turning point then? Like what causes it to kind of improve? because the slowdown that you talked about on your macro is very broad-based. We can see it in a lot of economic indicators. And it is quite -- it's already slowed down quite a lot. So I'm just wondering, incrementally, how does this evolve over the next kind of six, nine months?

Question: Chintan Joshi - Autonomous - Analyst : Okay. And the final one, perhaps for Sandeep, could you just give us some sense of how much of the rate cut has passed through the liability side already and some color on the asset side as well, but asset is slightly easier, liabilities. Where I would like some color.

Question: Chintan Joshi - Autonomous - Analyst : Thank you for all that color.

Question: Abhishek Murarka - HSBC Securities (USA) Inc - Analyst : Got it, sir. Sir, the second question I had was about this working capital loans, fresh business loans. I think you yourself acknowledged that every such MSME business owner, right, typically gives out these files to 3, 4 lenders. You have heard from multiple DSAs in the past that there was a time and not very long back, where -- I mean, if I were to just quote them, right. (spoken in foreign language). So, what I'm trying to understand is now that you acknowledge that this storm was sudden and which is where we are slowing down, I'm just thinking aloud here that if everyone starts rationing credit in business loan working capital loans. Do you think that we might again kind of get into some kind of a credit cycle in this segment. But the reason I asked is we saw that in all unsecured -- all other unsecured segments earlier. Be it credit cards, we microfinance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 1:00PM, BJFN.NS - Q1 2026 Bajaj Finance Ltd Earnings Call

Question: Ajit Kumar - JM Financial Institutional Securities Pvt Ltd - Analyst : SP1679546638 Raj, Sandeep and Bajaj Finance team. Do you want to make any closing comments before you we conclude?