Bajajfinsv FY26 Annual Earnings Summary

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.

Competition remains high across motor, health, and crop segments, potentially pressuring pricing and combined ratios.

BALIC's group protection business declined 7% YoY, largely due to slowdown in MFI lending, which is outside management's control.

Management noted that crop tender pricing is below comfortable levels, which could lead to lower win rates or adverse loss ratios.

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.

Motor OD loss ratio increased to 71% in Q2, above historical trends. Management termed it a quarterly blip but it bears watching.

Motor own-damage loss ratios remain high across the industry due to IDV reduction from GST and rising repair costs; pricing correction may take time.

Persistency ratios declined in line with industry trends; management acknowledged the issue and is working on it, but it could pressure future renewal premiums.

Persistency dips observed across the industry and Bajaj Life, partly due to early gratification products. Management expects further sector decline.

Industry combined ratio deteriorated 6-7% YoY; Bajaj General reduced exposure to crop and motor due to pricing pressures.

BALIC observed lower persistency in the 13-month bucket due to base effect of higher ticket size policies written in Q4 FY24.

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%.