Bajaj Finance Shares Drop 6% Post Q1FY26 Results: MSME Credit Stress in Focus

On July 25, Bajaj Finance shares tumbled by 6%, even though the company reported strong earnings for the quarter ended June 30, 2025. The fall came after analysts raised concerns over rising credit stress, especially in the MSME segment, and increasing credit costs.

Brokerages flagged concerns around asset quality and credit risk, which spooked investors despite otherwise positive financials.

Strong Earnings: Profit and Revenue Growth On Track

Bajaj Finance, part of the Bajaj Group, delivered a robust performance in Q1FY26.

• The consolidated net profit rose 22% year-on-year to ₹4,765 crore, up from ₹3,912 crore in the same quarter last year.

• Revenue grew 21% to ₹19,524 crore from ₹16,100 crore in Q1FY25.

• The company also booked 13.49 million new loans, marking a 23% growth over the 10.97 million loans booked in the year-ago quarter.

These numbers reflect strong loan demand and steady growth momentum in Bajaj Finance’s lending business.

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Why Did the Stock Still Fall?

Despite the strong topline and bottom-line performance, market sentiment turned negative due to concerns highlighted by brokerages. The key issues were:

• Rising stress in the MSME loan book

• Elevated credit costs

• A cautious outlook on asset quality amid macroeconomic uncertainties

Investors are now watching how the company manages asset quality in the coming quarters, especially in the high-risk MSME lending segment.

Buy, Sell, or Hold?

The stock’s sharp decline has triggered debate among investors—is this a buying opportunity or a sign of deeper worries ahead? While the fundamentals remain strong, the MSME stress and asset quality outlook need to be tracked closely.

Long-term investors may choose to hold and wait for clarity, while short-term traders should stay cautious.

Bajaj Finance’s Q1FY26 performance shows strong growth, but rising credit stress has cast a shadow over the stock. How the company manages risks in the next few quarters will be key to future performance and investor confidence.

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