Bajajfinsv vs Grasim Q2 FY26

Bajaj Finserv reported a solid Q2 FY26 with consolidated revenue up 11% to INR 37,400 crore and PAT up 8% to INR 2,244 crore (12% ex-MTM). The life insurance arm was the standout: VNB surged 50% to INR 367 crore and NBM expanded to 17.1% (from 10.8% last year), driven by product mix shift and cost optimization. General insurance GWP grew 9% (13.6% ex-one-off), though combined ratio remained above 100% at 102.3% due to upfront acquisition costs. Lending subsidiaries (BFL, BHFL) delivered strong AUM growth of 24% each with stable asset quality. Management guided for life insurance growth to re-accelerate in H2 and expects to mitigate GST ITC impact over two quarters. Key risk: elevated credit costs in unsecured MSME and two/three-wheeler segments at BFL.

Guidance read

Life insurance growth to re-accelerate in H2: After four quarters of flattish top line, management expects significant growth trajectory above industry from Q3 onwards, supported by GST tailwinds. GST ITC impact to be mitigated in two quarters: Management expects to manage the GST input tax credit burden through product restructuring and distributor negotiations within the next two quarters. Life insurance margin expansion of 4-6% for FY26 (pre-GST): Excluding GST impact, management expected NBM expansion of 4-6% for the full year, but GST noise may affect H2. BFL MSME AUM growth to be 10-12% for FY26: Bajaj Finance cut unsecured MSME volumes by 25%, leading to full-year AUM growth of only 10-12% in that segment.

Risk read

Key risks include Elevated credit costs in unsecured MSME and two/three-wheeler segments — BFL's net losses and provisions were up 19% YoY, with credit costs elevated in MSME and two/three-wheeler segments, though management is cutting volumes.; GST ITC impact on life insurance margins — The loss of input tax credit on GST is expected to impact NBM by ~450bps annualized if unmitigated. Management is working on mitigation but impact may persist for two quarters.; Motor OD loss ratio spike — Motor OD loss ratio increased to 71% in Q2, above historical trends. Management termed it a quarterly blip but it bears watching.; General insurance combined ratio above 100% — Combined ratio stood at 102.3% (101.4% ex-one-off), impacted by upfront acquisition costs for long-term motor policies. Management expects it to remain near 100%..

Promise ledger

Of 1 tracked promise, management 1 met, 0 close, 0 missed.

Grasim's Q2 FY26 standalone revenue hit a record INR 9,610 crore, up 26% YoY, driven by strong performance in paints and B2B e-commerce. The paints business (Birla Opus) achieved double-digit market share and top-of-mind brand recall as #2, despite a weak monsoon impacting QoQ sales. The B2B platform Birla Pivot grew 15% sequentially and is on track to reach its INR 8,500 crore FY27 target. Core businesses faced headwinds: cellulosic fiber EBITDA fell 29% YoY due to high input costs, and chemicals profitability remains range-bound. Management reaffirmed guidance for paints to become #2 and profitable within three years. Key risk: sustained pressure from global caustic price volatility and cheap Chinese imports.

Guidance read

Paints: #2 revenue market share and profitability within 3 years of full-scale operations: Management reaffirmed commitment to achieve number two revenue market share and profitability within three years of full-scale operations, with no change in strategy post CEO resignation. Paints: double-digit QoQ growth in Q3 FY26: Management guided for continued double-digit sequential growth in Q3, citing strong September and October sales momentum. Birla Pivot: likely to achieve INR 8,500 crore revenue target sooner than FY27: CEO indicated a likely chance of reaching the billion-dollar (INR 8,500 crore) milestone earlier than the stated FY27 target, though no formal revision yet. Chemicals: ECH and CPVC plants to contribute meaningfully from Q1 FY27: Mechanical completion expected by Q3 FY26, with meaningful contribution from first quarter of next financial year.

Risk read

Key risks include Global caustic soda price volatility — Chemicals profitability remains heavily dependent on caustic soda prices and chlorine demand, which are difficult to predict and subject to global trade dynamics.; Cheap Chinese imports impacting cellulosic yarn realizations — Cellulosic fashion yarn realizations continue to be impacted by cheaper imports from China, pressuring margins.; Paints market share deceleration risk — Analyst noted sequential market share gains have moderated from 100-150bps to ~20bps QoQ; management disputed this but acknowledged the need to accelerate volume share to match capacity share.; CEO resignation impact on paints business execution — The sudden resignation of Birla Opus CEO Rakshit Hargave raises questions about leadership continuity; management downplayed impact but successor not yet announced..

Promise ledger

Of 2 tracked promises, management 2 met, 0 close, 0 missed.