Credit costs test Bajaj Finance

Bajaj Finance Ltd stock tanked 7% on Tuesday despite clocking healthy growth in assets under management (AUM) inthe September quarter (Q2FY26). Elevated credit cost hasbeen its Achilles’ heel, making investors edgy. Ona consolidated basis, Bajaj Finance's credit cost rose to 2.05% in Q2FY26 versus 2.02% in QIFY26and 2.04% in HIFY26. This was higher than the guided 1.85-1.95%.

- Shubham Diwakar

Credit costs stayed higher largely due to stress in micro, small and medium enterprises (11% of AUM) and captivetwo-and three-wheelers (1.5% of AUM).

Overleveraging by borrowers, weak recovery in small business pocketsand rising competition from fintechs hurt the MSME portfolio. However, it expects FY26 credit cost toremain within its guidance range of 185-195 bps on improving asset quality forloans disbursed after February. It seesa material fall in credit cost in FY27.