Summary
Bajaj Finserv Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 5, 2026, 10:00 a.m. IST
Event Participants
Executives 9 Ashish Panchal, Avais Karmali, Ganesh Mohan, Ramandeep Singh Sahni, S. Sreenivasan, Tapan Singhel, Tarun Chugh, Vipin Bansal, Devang Mody
Analysts 4 Divij Punjabi, Nischint Chawathe, Raghvesh, Satvik
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Total Income | ₹39,708 crores | +24.0% YoY; robust growth across lending and insurance businesses. |
| Consolidated PAT (Adjusted) | ₹2,936 crores | +32.0% YoY; adjusted for ₹167 cr Labor Code impact and ₹540 cr BFL ECL provision. |
| BFL AUM | ₹4,85,883 crores | +22.1% YoY; diversified model supporting strong volume growth. |
| BHFL AUM | ₹1,13,546 crores | +23.2% YoY; strong momentum in LAP (+32%) and LRD (+39%). |
| BAGIC GWP | ₹7,389 crores | +11.5% YoY; core GWP (excl. crop/govt health) grew 17.2%. |
| BALIC Retail WRP | ₹1,856 crores | +19.9% YoY; reinstated growth backed by 47% growth in retail protection. |
| BAGIC Combined Ratio | 97.9% | -320 bps YoY; among the lowest in the multi-line market despite pricing pressure. |
| BALIC VNB | ₹405 crores | +59.0% YoY; highest-ever value of new business on YTD basis over the last decade. |
| BALIC NB Margin | 19.0% | +390 bps YoY; driven by structural shift toward protection and annuities. |
| GNPA (Bajaj Finance) | 1.20% | +10 bps YoY; Stage 2 & 3 assets decreased by ₹93 cr in Q3. |
| Solvency Ratio (BAGIC/BALIC) | 344% / 333% | Well above regulatory requirements, positioning for external adversity. |
Geographic & Segment Commentary
- Bajaj General Insurance (BAGIC): Ranked first among private players in GDPI for the quarter. Growth was primary driven by Motor and Health segments, offset by a de-growth in crop insurance due to pricing pressures. Underwriting was impacted by a ₹42 crore one-time labor wage code hit and higher acquisition costs in preferred segments.
- Bajaj Life Insurance (BALIC): The “Life 2.0” strategy yielded a balanced product mix (44% ULIP, 23% Par, 14% Non-par savings, 11% Annuity, 9% Term). Retail protection grew 47% YoY, now contributing 9% of retail business. The company is actively expanding its footprint into GIFT City and starting a Pension Fund Management business.
- Emerging Businesses: Bajaj Finserv Health saw transactions triple to 6.2 million YoY with a network of 1.34 lakh doctors. The AMC reached ₹30,000 crore AUM in just 2.5 years (26th in industry), with a high equity mix of 56%. Bajaj Markets is transitioning frontline sales to SFDC, with revenue growth expected to resume in Q4.
Company-Specific & Strategic Commentary
- Allianz Stake Buyout: Successfully completed the acquisition of Allianz’s 23% stake on Jan 8, 2026; Bajaj Group now holds 97% in both insurance subsidiaries. A buyback is planned for the remaining 3% to conclude the exit and improve ROE/ROEV.
- Credit Resilience: Bajaj Finance implemented a minimum LGD floor across all businesses, resulting in a ₹1,406 crore accelerated ECL provision. This move is intended to enhance balance sheet strength despite current low NPA levels.
- Expansion into Alternates: Launched “Bajaj Alts” to target the AIF and PMS segments (₹1 crore+ tickets). Operations are expected to commence by the end of FY 2027, complementing the retail-focused AMC.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| VNB Growth | Tapering Expansion | Management expects the 50% VNB growth rate to moderate as the base effect kicks in. |
| GST Mitigation | ~325 bps by Q4 FY26 | Targeting mitigation of most of the 450 bps GST impact; remaining 125 bps represents a permanent reset. |
| Bajaj Markets Revenue | Growth Reinstatement | Expected to resume growth from Q4 FY26 following the completion of the SFDC software migration. |
| Bajaj Alts Operations | Launch by FY27-end | Staged rollout planned for AIF and PMS products subject to regulatory approvals. |
Risks & Constraints
| Risk | Context |
|---|---|
| Motor OD Loss Ratios | Industry-wide spike due to lower IDVs (following GST changes) and inflationary repair costs. Management is seeking to correct this through pricing and better claim negotiations. |
| Labor Wage Code | One-time gross impact of ₹380 crores across the group (₹167 crores net PAT impact for BFS). This creates a temporary drag on profit margins for the current quarter. |
| Persistency | Dips observed across specific cohorts in life insurance, mirroring industry trends. Management is actively working on remediation strategies for these specific segments. |
Q&A Highlights
Life Insurance Margins & GST
- Question: What is the outlook on VNB margins given the GST hit? (Nischint Chawathe)
- Answer: The company mitigated ~325 bps of the projected 450 bps impact. While the trajectory remains positive, the pace of margin expansion will likely taper as “Life 2.0” matures (Vipin Bansal).
General Insurance Underwriting
- Question: Why have underwriting losses increased despite improved combined ratios? (Uday Pai)
- Answer: Losses include a ₹42 crore labor code hit and upfronted commissions for multi-year two-wheeler/four-wheeler policies where market share was gained. Net Earned Premium (NEP) was also optically lower due to reinsurance treaty changes (Ramandeep Singh Sahni).
Motor Loss Ratios
- Question: How will the company address the elevated Motor OD loss ratios? (Shobhit Sharma)
- Answer: The ratio is pressured by lower premium realization (IDV drop due to GST) and high repair inflation. Correction will come through premium increases and underwriting mix adjustments as the market “hardens” (Tapan Singhel).
Agency Channel Strategy
- Question: Is the agency channel bottoming out? (Nischint Chawathe)
- Answer: Focus has shifted from top-line growth to VNB, which doubled in nine months. The company will prioritize efficiency and branch profitability over aggressive footprint expansion (Tarun Chugh).
Key Takeaway
Bajaj Finserv delivered a resilient Q3 FY26, characterized by high double-digit growth in its core lending and insurance subsidiaries. Consolidated PAT grew 32% YoY on an adjusted basis, despite significant one-off charges related to the New Labor Code and proactive ECL provisioning at Bajaj Finance. The insurance vertical marked a historic milestone with the exit of Allianz, moving toward 100% ownership by the Bajaj Group. Bajaj Life reported its highest-ever VNB and a 19.9% growth in retail WRP, while Bajaj General maintained a superior combined ratio of 97.9% despite industry-wide pressure on motor OD loss ratios. The AMC business showed exceptional scaling, reaching ₹30,000 crore AUM in record time. Looking ahead, management is focused on navigating GST-related margin resets in Life insurance and correcting motor pricing in General insurance, while pivoting toward high-ticket alternative investments via the newly formed Bajaj Alts.
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