The upgrade, announced on March 17, reflects S&P Global’s view that Bajaj Finance will benefit from a strengthening regulatory environment, particularly for upper-layer fincos in India.
However, the ratings remain capped at the level of the sovereign credit rating on India (BBB-/Positive/A-3), given the direct and indirect influence the sovereign has on financial institutions operating locally.
Bajaj Finance’s strong market position in financing for consumer durables and two-and three-wheelers, underpinning its reach in the Indian retail market, was highlighted as a key factor. The company consistently maintains above-average profitability, contributing to its positive credit profile.
S&P Global expects Bajaj Finance to maintain healthy financial performance amid good operating conditions, supported by stable earnings, asset quality, and continued access to low-cost funding.
The company also benefits from its affiliation with the broader Bajaj group, providing better funding access at a more competitive price than peers.
The agency anticipates that Bajaj Finance’s capital and earnings will remain strong, projecting that the company’s pre-diversification RAC ratio will dip below 15% by fiscal 2026, driven by faster growth than the industry average, projected at 25%-27% over the next two years.
Adequate underwriting standards and a largely mass-affluent borrower profile, aside from auto-finance and recent new ventures, mitigate the risks associated with unsecured consumer lending. S&P Global forecasts Bajaj Finance’s credit costs to be around 2% of average loans over the next 12-24 months.
Shares of Bajaj Finance Ltd. are trading flat at ₹8,560.60.
