Bajaj Finserv Q2 FY27 Earnings Call: Bajaj Finance Clears Rs. 17,500 Cr Fundraise, Protection Pivot Lifts VNB 40% (BAJAJFINSV)

Bajaj Finserv Ltd held its Q2 FY27 earnings call on November 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Consolidated Growth Holds; Insurance Subsidiaries Show Mixed Profitability

• Consolidated PAT +25% YoY to Rs.5,952 crore — total income +17% YoY to Rs.43,416 crore in Q2 FY 2026-2027; PAT attributable to owners +23% to Rs.2,758 crore.
• Bajaj General PAT degrew to Rs.420 crore (vs Rs.517 crore in Q2 FY26) on lower capital gains amid volatile equity markets, NatCat claims, and ~Rs.50 crore impact from capital reduction via buyback/dividend over the last six months.
• Bajaj Life PAT Rs.55 crore vs Rs.13 crore in Q2 FY26 — growth on a low base due to a one-time Rs.112 crore GST impact last year, partly offset by lower capital gains.
• Bajaj Finance PAT +29% to Rs.6,267 crore — net total income +23% to Rs.15,974 crore; opex/NTI flat at 33%, with management confident of improving opex/NTI by 25-40 bps in FY27 on AI-driven operating efficiencies.
• Bajaj Housing Finance PAT +18% to Rs.757 crore — crossed Rs.1.5 lakh crore AUM milestone, +25% YoY; opex/NTI improved to 19.1% (vs 19.7%).
• Solvency comfortable at both insurers — Bajaj Life at 255%, Bajaj General at ~230%; management says both are well poised to weather external adversity.

Growth Ahead of Industry Ex-Tender; Underwriting Loss Widens on NatCat and Mix

• GWP +10% YoY to ~Rs.7,556 crore — marginally below the industry's ~12%; excluding tender-driven crop and government health business, GWP +21% (vs industry ~13%), driven by health +31% and motor +18%.
• Underwriting loss Rs.115 crore (vs Rs.92 crore in Q2 FY26) on net NatCat claims of Rs.75 crore; combined ratio 104.5% (vs 102.3%), ~102% ex-NatCat and 101.4% ex-NatCat and 1/N regulation impact (a temporary difference).
• Health loss ratio uptick is a mix effect — CFO Ravesh Karmali attributed it to NEP skewed toward tender business with a much higher expense ratio on "2 plus 1" contracts; he envisions the health loss ratio will come down (period unspecified).
• Motor growing 14-15%, ahead of the industry — elevated motor OD loss ratios partly attributed to the ROA model for new business (1+3 / 1+5 structures), where first-year loss ratios are higher and taper over the contract horizon; management expects the NatCat-driven elevation not to continue at the current rate in Q3 FY 2026-2027.
• NatCat framed as recurring but variable — a spike roughly every 2-3 years; over the last 10 years the maximum net NatCat hit has not exceeded roughly Rs.100 crore, with losses contained by retention and reinsurance arrangements.
• AUM Rs.36,313 crore (vs Rs.34,974 crore) — growth curbed by ~Rs.3,500 crore buyback plus dividend payout in Q1 FY27; annualized ROE at 200% solvency at 16.2%.

Deliberate Protection Pivot Lifts VNB and Margins; Persistency a Watch Item

• VNB +40% to Rs.512 crore; NBM 21.6% vs 17.1% — retail weighted received premium +5% to Rs.1,942 crore; rolling 12-month NBM crossed 20% at 20.8% despite GST impact.
• Protection mix shift is deliberate — MD & CEO Tarun Chugh said slower Q2 FY 2026-2027 agency growth reflects a product-mix pivot: agency protection sales grew 54% YoY and institutional face-to-face channels grew term 49% and 62% (vs Q2 FY 2025-2026); management may follow this protection-first route for another quarter (through Q3 FY 2026-2027).
• Regulator signal on protection — management read clear signals from the regulator that the ask is towards protection and made the early move over the last six months; Bajaj Life claims the highest percentage of product focus on risk products in face-to-face channels in the sector today.
• 25th-month persistency dipped ~4% — largely market-driven (weak markets triggering payment decisions) rather than a broad product issue; discontinued policies earn only a guaranteed 4%; the previously flagged non-par product effect runs through both the 13th and 25th months.
• Margin expectations diverged on the call — Vipin Bansal called the 20.8% rolling NBM a reasonable baseline going forward with aspiration to only expand, while Tarun Chugh cautioned the 4.6% margin expansion achieved in Q2 FY 2026-2027 is unlikely to sustain and expectations should be lowered.
• VNB up 53% in H1 FY 2026-2027 — S. Srinivasan framed VNB as the earnings-equivalent metric; management's stated quest is to keep growing VNB faster than top-line growth.
• IndusInd Bank channel goes live in Q3 FY 2026-2027 — pickup expected from Q4 FY 2026-2027; Chugh declined to quantify the opportunity, said Bajaj Life will not be the fourth-largest player there, and noted recent tie-ups (Yes Bank, AU and Federal Bank over the last 18 months, plus IndusInd) should make up a significant part of institutional business growth.

Bajaj Finance Momentum Strong; Rs.17,500 Crore Capital Raise Approved

• Bajaj Finance: new loans +11% to 1.34 crore; AUM +26% to ~Rs.5,84,000 crore — loan losses/AUM improved to 1.56% (vs 1.88%); GNPA 1.06% / NNPA 0.42%; capital adequacy 20.3%.
• Rs.11,700 crore QIP plus Rs.5,800 crore preferential warrants — on 1 October 2026, Bajaj Finance's board approved the raise to qualified institutional buyers plus warrants convertible into equity shares to Bajaj Finserv Ltd, subject to shareholders' approval; driven by the India growth story, growth momentum, and resilience building.
• Bajaj Markets disbursements Rs.2,500 crore (vs Rs.2,269 crore in Q1 FY27 and Rs.1,549 crore in Q2 FY26) — operating revenue Rs.120 crore (+45%) with a growing trail-revenue mix; on track for planned break-even in Q4 FY27.
• Bajaj AMC crossed Rs.40,000 crore AUM intra-quarter — closed Q2 at ~Rs.35,760 crore (+24% YoY), retained 26th spot among all Indian mutual funds; equity mix 60%, non-group AUM 91%; incremental SIP book +42%, SIP folios +41% YoY.
• Bajaj Finserv Health revenue degrew — ~5.7 million healthcare transactions executed, but revenue was hit by restructuring of certain partnerships attributable to the RBI's revised circular on business conduct by NBFCs; mitigation underway, but H2 FY27 trajectory to be watched given the impact of the two circulars. Network: 1,30,000+ doctors, 32,000+ hospitals, 10,000+ lab touchpoints.

Draft Consultation Assessed as Manageable Over a Three-Year Walk; Ind AS on Track for 1 April 2027

• Management supports IRDAI's stated intent — fostering a customer-centric, competitive, efficient and transparent distribution ecosystem; but says it is premature to conclude as draft and final regulations are still to follow; both insurance subsidiaries are providing feedback to IRDAI.
• Scenario math (not guidance): ~9% total expense-ratio reduction vs the FY26 baseline — overlaying the commissions as proposed in the paper plus excluding GST and stamp duty would knock off another ~8% on top of the ~1% already achieved; Bajaj Life's GWP expense ratio is already down ~1% vs FY26 from optimization efforts.
• Compliance, if the paper comes through in the same shape and form, is required by FY28-29 end — a three-year walk from FY26; management is "not very worried" mathematically, though it will wait and watch the draft regulations; static math ignores offsets including 3 years of renewals accruing at low cost during the walk to FY28-29.
• Group product exposure flagged — Ramandeep Singh Sahni noted 80%+ of lives written across health and protection are via group products and warned that deep commission cuts under the draft reforms could have serious repercussions for penetration.
• Motor TP viewed as insulated — Tapan Singhel noted motor insurance is mandatory by law, so underlying business volumes should persist even if commissions are cut; S. Srinivasan added new two-wheelers must be sold with 5-year TP and new private cars with 3-year TP (mandatory), so new-vehicle coverage will not reduce on account of commission changes.
• Ind AS transition from 1 April 2027 — per recent IRDAI regulations, both insurance subsidiaries will transition to Ind AS; until then, consolidation uses Ind AS 104 basis (one-year forbearance sought); Tarun Chugh noted IRDAI now has a member actuary whose first task is Ind AS implementation and expressed confidence that Ind AS and RBC will all happen by 1 April 2027.

Emerging-Business Funding Under Rs.2,000 Crore; Break-Even Milestones Staggered Through FY29

• Total emerging-business funding need <Rs.2,000 crores over the next 12-18 months (through FY 2027-2028) — emerging businesses put together need ~Rs.800-900 crores; the alts business requires ~Rs.1,100 crores of sponsor capital (not burn capital) over roughly the next year (FY 2027-2028).
• Bajaj Finserv Direct: quarterly break-even hoped in Q4 FY 2026-2027, full-year break-even in FY 2027-2028 — no capital needs seen even as it expands into insurance and investment marketplaces.
• Bajaj Health to consume <Rs.200 crores in FY 2026-2027, much less in FY 2027-2028, with full-year break-even hoped in FY 2028-2029 (Endeavour break-even attempt targeted for Q4 FY 2027-2028); AMC needs another Rs.300 crores until break-even, probably in FY29, expected at Rs.90,000 crores–Rs.1 lakh crore of AUM (market-dependent); reinsurance venture to need Rs.500 crores over the next 2-3 years.
• Funding sources sufficient — surplus capital of ~Rs.5,000 crores (precisely Rs.4,700 crores) plus dividends from material subsidiaries (BFL and the insurance companies); an additional buffer may come from IRDAI's pending call on surplus generated at the one-time Ind AS migration on the life side, where management believes discounting and reserve adjustments could produce a one-time relief — whether it can be plowed back, and the timing, remain awaited.
• Bajaj Life growth levers stacking up — commenced GIFT City operations in October 2026; retail business with IndusInd Bank expected to start in Q3 FY27.
• New initiatives launched — PMS business operations commenced; first close of the real estate AIF completed in the quarter; reinsurance business filings for necessary approvals with IRDAI in process.
• Healthcare cost tailwind cited — Tapan Singhel noted ~80% of health insurance premium goes to hospitals and the government has made GST on health insurance zero; government steps to moderate hospital pricing should help bring down claims cost and end-consumer health insurance pricing; 80%+ of claims are at negotiated rates (more than 60%, ~67%, cashless at package rates).