Bajaj Finance Q3: Profit falls on higher provisions, labour code; Morgan Stanley says this 

Bajaj Finance's Q3 net profit took a hit from higher provisioning of Rs 1,671 crore and a one-time exceptional cost of Rs 265.22 crore arising out of the new labour codes that took effect last year. The NBFC's net profit slipped 6% to Rs 3,978 crore for the October-December quarter from the Rs 4,246.54 crore profit reported in the same period of the previous financial year.

However, brokerage Morgan Stanley seems bullish on the counter. It has an overweight call with a price target of Rs 1,195. New stressed loans were lowest since Q4. the brokerage said adding that credit costs were expected to fall sharply with new stressed loans continuing to fall. This should eventually drive credit growth higher. 

Underlying EPS forecasts are largely unchanged and FY26-28 CAGR is 25% plus, it added. 

"During the quarter, to strengthen balance sheet resilience amidst a volatile global economic environment, the Company further strengthened its Expected Credit Loss (ECL) provisioning framework by recalibrating ECL parameters and introducing minimum floors for some of the most sensitive inputs resulting in an accelerated ECL provision of Rs 1,406 crore," the company said.

Meanwhile, net interest income, rose 20.6% year-on-year to Rs 11,318 crore, meeting estimates, led by sustained expansion in the loan book.

The firm’s assets under management (AUM) rose 22 percent to Rs 4,85,883 crore in Q3 FY26 from Rs 398,043 crore in Q3 FY25.. In terms of loan growth, 1.39 crore new loans were booked in Q3, up 15% year-on-year. The customer franchise rose 19% YoY to 11.54 crore, with 47.6 lakh customers added during the quarter. 

Asset quality was stable, with gross NPAs at 1.21% and net NPAs at 0.47%. The capital adequacy ratio came at 21.45%, with Tier-I capital at 20.60%.