Bajaj Finance is one of India’s largest non-banking financial companies (NBFCs), active across consumer lending, SME loans, rural financing, and insurance distribution. Citi released a Q2 note highlighting consolidated AUM growth of 23.6% year-on-year, new loans booked of 12.2 million, and a target price of ₹9,500. This post summarises Citi’s key observations, contrasts them with recent trends, and draws investor-focused takeaways while keeping risk factors in view.

Citi reports consolidated AUM growth of 23.6% in Q2 — broadly in line with its estimates. That growth moderated from 24.6% in Q1FY26 and 28.8% in Q2FY25. For investors, the key point here is the trend: growth remains healthy but shows signs of steadying from the higher expansion seen last year.

Citi also flagged that new loans booked were 12.2 million in the quarter, and that sequential moderation was largely seasonal. When assessing such figures, separate the structural drivers (market share, product expansion) from cyclical drivers (seasonality, festive demand, EMI cycles).

Citi projects NIMs to remain stable in Q2. For Bajaj Finance, stable NIMs despite growth moderation suggests pricing discipline and a controlled mix shift between higher-yield unsecured consumer loans and lower-yield secured products. Stable NIMs are supportive, but investors should watch the interplay of funding costs and loan mix over the next two quarters.

On credit costs, while Citi did not flag any material deterioration in this note, monitor delinquencies in categories sensitive to economic shocks — consumer durables, personal loans, and higher-ticket commercial lending. Even small slippages in unsecured portfolios can influence provisioning trends given the book size.

The 12.2 million new loans figure is large in absolute terms but showed sequential moderation due to seasonality, per Citi. Seasonality can mask underlying demand strength — a softer quarter may simply shift originations forward. Track 3–6 month rolling originations to see whether moderation reverses into Q3/Q4 (festive season) or persists.

Also consider ticket-size trends. A rise in the number of low-ticket products versus high-ticket loans changes yield and risk profiles even if aggregate new-loan counts remain healthy.

Citi’s target price of ₹9,500 should be interpreted in context: targets reflect a combination of earnings growth assumptions, return on equity expectations, and a multiple that the broker is comfortable assigning to an NBFC with Bajaj Finance’s franchise. For investors, reconcile Citi’s target with consensus FY26–FY27 earnings per share and implied multiples — is the multiple assumption conservative, neutral, or aggressive relative to peers?

Avoid treating targets as short-term trade signals. Instead, use them as inputs to probabilistic scenarios: downside protection if growth falters, upside if core segments outpace estimates, and sensitivity to margin compression or higher funding costs.

⚠️ Funding-cost volatility — any sharp rise in market rates can compress NIMs unless the company re-prices assets timely.

⚠️ Credit-cycle turn — worsening macro could impact unsecured pockets disproportionately.

📉 Competitive intensity — higher acquisition promos or rate competition could pressure yields and incremental ROAs.

For investors with multi-year horizons, Bajaj Finance’s scale, distribution depth, and product diversification remain attractive structural attributes. If you own the stock, consider monitoring rolling originations and NIM guidance to validate Citi’s stable-margin view.

For traders or shorter-term investors, pair fundamental cues with option-implied vol and liquidity signals before increasing exposure. Keep stop levels and position sizing disciplined given NBFC sensitivity to rate and credit cycles.

• Citi’s Q2 note indicates durable AUM growth (23.6% YoY) with seasonal moderation in new loans; NIMs are expected to remain stable. Investors should treat the note as confirmation that growth is healthy but moderating from stronger prior-year comparables.

• Key monitoring points: rolling new-loan trends, ticket-size mix, NIM trajectory if funding costs shift, and early warnings in delinquencies in unsecured segments.

• For portfolio decisions, weigh Citi’s ₹9,500 target alongside your risk tolerance, time horizon, and scenario-driven valuation — and consider rebalancing if future quarters show persistent margin pressure or credit deterioration.

Free guidance at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.