Bajaj Finance spurts 7% after S&P Global Ratings upgrade; details here

Bajaj Finance's creditworthiness benefits from the company's strong market position in the financing of consumer durables and two- and three-wheelers, and its adequate liquidity, S&P Global said.

Share price of Bajaj Finance today

 

Shares of Bajaj Finance surged 7 per cent to ₹919.15 on the BSE in Monday’s intra-day trade amid heavy volumes after ratings agency - S&P Global Ratings upgraded the company’s credit rating from BBB-/Positive/A-3 to BBB/Stable/A-2.

 

S&P Global Ratings upgraded ratings of 7 banks and 3 NBFCs to 'BBB'

 

This credit rating upgrade is linked to revision in India's sovereign credit rating. Though such rating upgrade is seen to aid growth and attract capital, near term benefit on valuation remains limited.

 

Bajaj Finance's creditworthiness benefits from the company's strong market position in the financing of consumer durables and two- and three-wheelers, and its adequate liquidity, S&P Global Ratings said in its rationale.

 

The rating agency expects Bajaj Finance to sustain its RAC ratio above 15 per cent, in line with a very strong capital and earnings assessment over the next 12-24 months. The ratio was 18.9 per cent as of March 31, 2025, benefiting from lower risk weights because risks are recalibrated to reflect India's improved economic environment and the upgrade of the sovereign. The rating agency also expects the ratio to benefit from the company's good profitability and low dividend payout amid some pressure from the company's likely above-average loan growth.

 

“The stable rating outlook reflects our view that Bajaj Finance will maintain its strong market position and healthy capital position over the next two years. We also expect the company's liquidity and funding profile to remain adequate over the period. A downgrade of Bajaj Finance is unlikely over the next 12-24 months, in our view,” S&P Global Ratings said.   

GST rationalization

 

As per media reports, the Finance Ministry has proposed a simplified two-slab system for Goods and Service Tax (GST) for most products vs existing 4-tier structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent. Prime Minister Narendra Modi in his Independence Day speech stated the next generation GST reforms will be a Diwali gift for the country. Reports suggest the rates could be reduced to 18 per cent and 5 per cent.

 

The move, if implemented, is expected to lower prices by ~10 per cent, thereby boosting affordability and penetration, particularly in energy-efficient ACs which have low penetration. With sentiment already subdued due to weak summer demand and high inventory levels, the GST cut could provide timely relief and drive volume growth in the upcoming festive season.

 

Bajaj Finance is one of India’s largest and well-diversified non-banking finance companies (NBFC). The company provides loans for two wheelers, consumer durables, housing, SME & MSME businesses etc. Bajaj Finance has an asset under management (AUM) of ~₹4.41 trillion as of June 2025, and continues to be the largest consumer durables lender in India.

 

Moody's Ratings view on Bajaj Finance

 

Bajaj Finance's profitability is one of the highest amongst our rated Indians NBFCs because of its presence in high yielding segments, competitive borrowing costs, and strong economies of scale. Moody’s Ratings in rating action dated August 4, 2025, said that it expects Bajaj Finance’s profitability to benefit from a reduction in cost of funding because of policy rate cuts feeding through its borrowing rates, The Reserve Bank of India (RBI) reduced its policy rate by 100 basis points starting from February 2025. However, credit cost should remain elevated.

 

“We expect the company to maintain one of the lowest stage 3 loans in the industry, which stood at 1 per cent of total loans as of end June 2025 with overall provision coverage of 165 per cent. Bajaj Finance is experiencing higher delinquencies in some unsecured lending categories and small business loans mainly driven by the overleveraging of some customers. It is also winding down its 2 & 3-wheeler business and taking charge-offs in this process,” Moody’s Ratings said.