Bajaj Finserv FY26 Annual Earnings Summary

The loss of input tax credit due to GST changes caused a 140bps hit to NBM in Q2, with annualized impact estimated at 450bps if unmitigated.

BFL's net losses and provisions were up 19% YoY, with credit costs remaining elevated due to stress in two-wheeler and MSME portfolios.

Combined ratio stood at 102.3% (101.4% ex-1/n), driven by higher acquisition costs from writing long-term motor business. Management expects it to remain near 100% but not below.

Industry-wide motor OD loss ratios have risen due to lower IDV post-GST and inflation in repair costs; Bajaj General is also affected.

After a year of ~50% average VNB growth, management expects growth to slow as base effects kick in.

Persistency ratios declined across a few cohorts in line with industry trends, which could impact future renewal premiums.

Analyst raised concern about pricing pressure in motor and health segments; management acknowledged industry-wide correction but did not provide specific mitigation timeline.

Persistency ratios declined across certain cohorts, in line with industry trends, which could impact future VNB if not reversed.

Underwriting losses widened due to higher claims from government health schemes, though management considers it a timing variance.

Analyst raised concern about pricing pressure; management acknowledged but said they will reduce exposure where pricing is inadequate.

Motor own damage loss ratio increased to 71% in Q2, attributed to OEM price hikes. Management termed it a quarterly blip but corrective actions may take time.

Management cited lack of clarity on IFRS 17 assumptions and tax implications, leading to forbearance request; could cause reporting volatility.