Rating Rationale

Key Rating Drivers - Strengths

Large, well-diversified NBFC

The Bajaj group has emerged as one of the largest retail-focused NBFCs in India with its two-pronged strategy of building scale and maximising profit. Segments such as mortgage, small business loans and commercial lending are largely focused on building scale while consumer durable loans, personal loans, and two and three-wheeler financing are focused on aiding profitability.

On a consolidated basis, the assets under management (AUM) of BFL have grown at a CAGR of 23.1% over the last 5 years to ~Rs 4,16,661 crore as on March 31, 2025. In fiscal 2025, the company grew at ~26% on-year on consolidated as well as standalone basis. As on December 31, 2025, the consolidated and standalone AUM stood at Rs 4,84,477 crore and Rs 3,53765 crore, respectively.

The company has recently expanded into new segments, such as new car loans, commercial vehicle loans, tractor financing, gold loans and MFI lending. These currently account for very small proportion of overall book on a consolidated basis. As on December31, 2025, on a consolidated basis, mortgages (including loans against property) and home loans accounted for 31% of AUM (of this, LRD being 19%), personal and consumer durables loans (35%), SME loans (11%), two and three-wheeler financing (3%), loan against securities (6%) and others (14%) including gold loan, MFI lending and CV & tractor finance amongst others. Further, the secured book (excluding consumer durables) accounts for over 60% of the AUM as on March 31, 2025, as against 61% and 59% as on March 31, 2024, and March 31, 2023, respectively.

BFL is also enhancing its presence through an expanded branch network which will further support growth.

Strong capitalisation levels

Capitalisation is strong, with sizeable, consolidated net worth of Rs 1,08,352 crore as on December 31, 2025 (Rs. 98,937 crore as on March 31, 2025). As on the same date, the standalone net worth stood at Rs 98,100 crore (Rs 87,996 crore as on March 31, 2025).

On December 2, 2025, to meet regulatory requirements, BFL divested ~2% of its stake in BHFL through open market mechanism and gained Rs 1,416 crore (net of selling expenses). Post this transaction, Bajaj Finance's holding in BHFL has declined to 86.71% from 88.70%. BFL is expected to further reduce its stake to or below 75% in medium term to be compliant Securities and Exchange Board of India (SEBI) norms. Healthy capitalisation enhances the ability to absorb potential losses on its portfolio; adjusted networth to net non-performing assets (NPAs) ratio was healthy at 48 times as on December 31, 2025 (54 times as on March 31, 2024), on a consolidated basis and at similar level on a standalone basis.

As on March 31, 2025, the gearing levels stood at 3.1 times and 3.6 times on a standalone and consolidated basis, respectively. The group has a conservative gearing policy. Despite continued healthy growth, adjusted gearing was below 6 times in the past five fiscals. Each time gearing inched closer to 6 times, capital raising plans have been initiated and concluded. This is supported by timely and regular equity raise as well as strong internal accrual. We believe the group to continue to maintain gearing of less than 6 times on a steady state basis.

Crisil Ratings expects the capital profile to remain comfortable over the medium term supported by regular capital infusion, demonstrated ability to raise capital and healthy internal cash accrual, providing cushion against asset-side risks.

Healthy earnings profile

The earnings profile of the group is supported by a large proportion of high-yield businesses and competitive borrowing cost. Additionally, the company has increased efforts to diversify earnings by focusing on various fee-based income avenues, such as existing member identification cards, co-branded credit cards and third-party product distribution. However, positive effects of these were partially offset by one-time charges related to past service cost of gratuity which is estimated to be Rs 250 crores. Nonetheless, the earnings profile continues to be driven by healthy yields supported by controlled credit costs and operating expenses.

On a consolidated basis, portfolio yield moderated to 16.2% over nine months of fiscal 2026 from 16.7% in fiscal 2024. Additionally, credit costs has inched up to 2.1% (annualized) over nine months of fiscal 2026 on account of accelerated ECL provisioning as against 1.9% in fiscal 2025. Moderation in yield coupled with marginal increase in credit cost has resulted decline in return on average managed assets (ROMA), albeit remained healthy, to 3.7% (annualized) in over nine months of fiscal 2026 against 1.9% in fiscal 2025 and 4.4% in fiscal 2024.

Standalone RoMA also remained healthy and stable at ~4.4% (annualized) for nine months of fiscal 2026, against 4.2% in fiscal 2025.

BFL’s earnings remain susceptible to volatility in credit costs, especially during macroeconomic stress, despite the conservative provisioning policy. While the company has healthy earnings profile, the ability of the company to manage its credit costs and cost of borrowings will remain a key monitorable.

Strategic importance to the ultimate holding company BHIL, and parent Bajaj Finserv

BFL is strategically important to the Bajaj group as the company gets significant financial, managerial and operational support from its parent, Bajaj Finserv. BFL is one of the crucial entities of the group's financial services business and its established track record of profitable growth enhances its strategic importance. Crisil Ratings believes BFL will continue to benefit from synergies with the Bajaj group.

The financial flexibility of Bajaj Finserv has improved supported by the performance of its operating companies, including insurance ventures. In the unlikely event of BFL requiring group support in an extraordinary situation, BHIL has sufficient liquidity in the form of cash and bank balance and portfolio of quoted investments to address the requirements. In addition, Crisil Ratings believes there is sufficient flexibility inherent in the market standing of the various listed and unlisted financial services entities in the group. Crisil Ratings also believes that financial flexibility will be sufficient to support any material requirements of BFL even if the group were to step up its stake in the insurance ventures.