(Reuters) -Shares of India's Bajaj Finance tumbled 7.5% on Tuesday after the non-bank lender cut its asset growth forecast for fiscal 2026, stoking concerns over its near-term expansion prospects.
The company now expects assets under management to grow 22%-23%, down from the 24%-25% projected earlier, citing rising bad loans in its small business segment and mounting competition in housing finance.
The downgrade reflects tighter risk controls in MSME lending and a trimmed outlook from its housing finance subsidiary, Vice Chairman and Managing Director Rajeev Jain said in a post-earnings analyst call.
The stock, which has been up nearly 50% so far in 2025, was the worst performer on the Nifty 50 on the day and saw its steepest single-day drop since April 2024.
"Despite the strong festive momentum, the cut in growth is perplexing," Macquarie Research analyst Suresh Ganapathy said, adding that the stock had earlier rallied on expectations that the company would be a key beneficiary of tax rate cuts among peers.
However, some analysts stayed positive about the lender's medium-term prospects, pointing to its efforts to contain bad loans and expand growth in segments beyond MSME.
While leverage of Bajaj Finance's customers continues to be an area of concern, J.P. Morgan analysts said Bajaj Finance's proactive move to reduce exposure to borrowers with multiple loans positions it well for fiscal 2027.
HSBC, meanwhile, raised its AUM growth estimates for FY26-28, expecting a pickup in new business lines and a recovery in rural lending.
Shares of holding company Bajaj Finserv also slipped 6.8%.
(Reporting by Urvi Dugar and Nishit Navin in Bengaluru; Editing by Mrigank Dhaniwala and Nivedita Bhattacharjee)
