Bajajfinsv vs TATA CONSUMER PRODUCTS 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.

Tata Consumer delivered a strong Q2 FY26 with consolidated revenue growth of 18% to ~INR 5,000 crore, driven by 14% underlying volume growth in India branded business. India tea and salt posted double-digit growth for the second consecutive quarter, while growth businesses (30% of portfolio) grew 27%, led by Sampann (+40%) and RTD (+31% volume). EBITDA margin expanded 80 bps sequentially to 13.6%, aided by tea margin normalization. International revenue grew 9%, but U.S. coffee margins remain under pressure from volatile coffee prices and tariff uncertainty. Management expects consolidated EBITDA margins to reach ~15% by Q4, contingent on coffee cost stabilization. Key risk: further escalation in coffee prices or tariffs could delay margin recovery in the U.S. branded coffee business.

Guidance read

Consolidated EBITDA margin target of ~15% by Q4 FY26: Management expects to reach ~15% EBITDA margin by Q4, implying 130-160 bps expansion from current 13.6%, barring coffee cost headwinds. India tea gross margin to remain in 34%-36% range: Tea gross margins will be maintained at 34%-36% to balance profitability and market share; pricing adjustments will be made as needed. Growth businesses to continue 30% growth trajectory: The 30% of portfolio growing at 30% is expected to sustain in the near term, driven by low penetration and distribution expansion. U.S. coffee price increases in January and possibly March 2026: Price increases announced for January 2026; a second round may be needed in March to normalize margins, subject to coffee cost and tariff evolution.

Risk read

Key risks include U.S. coffee margin pressure from volatile coffee prices and tariffs — Coffee prices remain volatile due to Brazil tariffs; management uncertain on timing of margin normalization, with at least one more quarter of pressure expected.; Distributor discontent over full portfolio mandate — News reports of distributor protests; management acknowledges discontent due to requirement to distribute entire portfolio, but denies abnormal inventory build-up.; GST disruption impact on Q2 growth and potential Q3 restocking — GST rate changes caused inventory destocking in late September; management unable to quantify how much demand was postponed vs. lost, creating near-term uncertainty.; Tea market share decline in Nielsen data — Nielsen reported 80 bps tea market share dip; management attributes it to under-representation of modern trade and e-commerce (37% of sales), but general trade share may still be declining..

Promise ledger

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