Bajaj Finance Limited received a credit rating outlook upgrade from ‘Stable’ to ‘Positive’ by S&P Global Ratings, reflecting its strong market position, robust financial performance, and improving regulatory environment for Indian financial companies. The agency has also revised Bajaj Finance’s standalone credit profile (SACP) from ‘BBB-’ to ‘BBB’, highlighting its growing strength in the financial services sector.
S&P Global noted that Bajaj Finance benefits from favorable operating conditions, stable earnings, and strong asset quality, alongside continued access to low-cost funding. The company’s leading position in consumer durables, two-wheelers, and three-wheeler financing was also highlighted as a key factor contributing to its market dominance.
The report emphasized that Bajaj Finance’s ratings remain capped by India’s sovereign credit rating, meaning any further upgrades will depend on an improvement in India’s overall credit rating.
Key Highlights from the Rating Report:
- Strong market position: Bajaj Finance remains one of India’s largest NBFCs, excelling in consumer lending.
- Financial resilience: Expected to maintain above-average profitability with credit costs around 2% of average loans in the next 12-24 months.
- Growth outlook: The company is projected to expand at a faster-than-industry pace of 25%-27% over the next two years.
- Capital and earnings strength: The pre-diversification Risk-Adjusted Capital (RAC) ratio is expected to dip below 15% by FY26, as the company aggressively expands its loan book.
- Independent operations: Bajaj Finance is financially and operationally independent from other Bajaj Group entities, ensuring stability.
Outlook & Future Implications:
S&P Global Ratings stated that an upgrade in India’s sovereign rating could lead to an upward revision of Bajaj Finance’s credit rating. Conversely, a downgrade in the sovereign outlook could result in the company’s rating outlook being revised back to stable.
With strong liquidity, a well-managed risk profile, and continuous growth in the retail finance market, Bajaj Finance remains one of the top NBFCs to watch in India’s financial sector.
This rating revision could positively influence investor sentiment, potentially benefiting the company’s stock performance in the coming sessions.
