Indian NBFCs 2026: Bajaj Finance vs Shriram Finance Outlook

Indian NBFC Industry 2025: Growth Trends and Investor Outlook

Indian NBFCs have started 2025 on a strong note, with total assets of Rs.48 trillion as of late FY25.

Growth Drivers

Credit expansion reached 20% in FY25, well ahead of banks, driven by 58% lending to retail segments such as consumer loans and gold finance. It is estimated to see 15-17% AUM growth until FY26 at Rs.60 trillion, driven by MSME and housing at 20-23% CAGR. This will thereby be supported by digital tools and diversified funding, including $9 billion private credit inflows in H1 2025.

Forward Challenges 

Unsecured loans are seeing a rise in delinquencies, with gross NPAs coming in the range of 2.21-2.31 percent. This would invite regulatory scrutiny and wholesale growth has been moderated at 10-12 percent. High borrowing cost is squeezing the net interest margins despite rate cuts.

Investor Viewpoint 

Strong capital ratios above 25% and healthy RoA around 1.4% signal resilience for top players like Bajaj Finance and Shriram Finance. The outlook is in favor of diversified NBFCs given that it has 21% NII CAGR potential in FY26-28; however, volatility calls for caution.

Bullish Momentum in Nifty Financial Services Indices

The Nifty Financial Services Index presently trades at 27,457 (as on 13th December,2025), is up 16.24% YTD with a P/E of 18.11, led by Bajaj Finance at 5.42% in weightage and Shriram Finance at 2.15%.

Combined Outlook 

Nifty Financial Services 25/50 at Rs.30,144 reflects 5.66% monthly gains. Nifty Financial Ex-bank index represents NBFCs with Bajaj Finance at 16.80% and Shriram at 6.35% weights. All three indices (Nifty Financial Services Index , Nifty Financial Services 25/50 Index and Nifty Financial Services Ex Bank Index) are indicating bullish trends in the wake of rate cuts, with targets at 28,000-31,000 by the end of FY26, driven by 15% credit growth. 

Company Profiles & Business Segments

Overview of Bajaj Finance: Business Mix, Strategy, and Recent Trends in 2025

Bajaj Finance is leading India's retail lending space, with its AUM reaching Rs.4.62 lakh crore in Q2 FY26, up 24% YoY as Bajaj Finance share price hovered around Rs.1,005 amid strong bookings.

Overview

The company operates across consumer finance-rural and urban, SME lending, commercial loans, and deposits, with retail at 80% of the mix. The customer base has expanded to 110.64 million, adding 4.13 million new users quarterly.

Business Mix

Consumer durable loans, personal loans, and gold finance form core segments, underpinned by deposits at Rs. 69,750 crore-up 5.4%. Housing finance and broking add diversification.

Strategy

Liberalised Remittance Scheme (LRS) 2025-29 encompasses 28 megatrends like green finance (Rs.2,000 crore goal by FY26 via solar/ EV), multi-cloud and zero-trust security target of 190-210 Mn customers by FY29.

Recent Trends in 2025

Q2 FY26 new loans were up 26% to 12.17 million, though MSME stress saw the moderate FY26 AUM guidance. Tech innovation & cross-sell drive resilience.

Overview of Shriram Finance: Business Mix, Strategy, and Recent Trends in 2025

Shriram Finance continues to stay a diversified NBFC giant, with AUM at Rs.2.72 lakh crore by June 2025, up 17% YoY, while Shriram Finance share price reflected steady rural demand. 

Overview 

Focuses on under-served segments, 9.71 Mn customers through 3,225 branches, with a financial inclusion focus in rural/semi-urban areas-50% AUM. 

Business Mix 

CV financing heads the list at 45% Rs.1.23 lakh crore, followed by passenger vehicle loans at 21%, MSME 14%, and two-wheelers 6%, with yields at 16.74%. 

Strategy 

Prioritizes scale through branch expansion and conservative lending to high-yielding assets, reducing post-merger reliance on CVs. Gross NPA improved to 4.53%. 

Recent Trends in 2025 

Profits surged 30% to Rs.9,553 crore in FY25, while AUM grew 35% in MSME and 46% in farm equipment in Q1 FY26. The gain was boosted by the sale of its stake in the housing unit.

Stock Trends: Bajaj Finance Limited and Shriram Finance Limited

The Bajaj Finance share price is at Rs.1,005 in mid-December 2025, despite volatility in slowdown in MSME sectors, with a gain of 12% in the YTD

Bajaj Finance Share Price Performance

The Bajaj Finance share price showed a jump of 25% in Q2 FY26 with a 24% AUM increase to Rs.4.62 lakh crore, but muted guidance for FY26 limited gains, with a P/E of 28.5 and a 52-week high & low of Rs.680- Rs.1,150. The RSI stands at 58.

Shriram Finance Share Price Performance 

Shriram Finance share price remains at Rs.785, up 18% YTD on a revival in the rural segments and a 17% AUM expansion to Rs.2.72 lakh crores. P/E ratio of 16.2 is an attraction, with yields at 16.74%, with a 20% target for a 35% jump in MSME lending. 

Overall Outlook

Both Shriram Finance share price and Bajaj Finance share price are driven by 15% credit growth in their sector, with an objective to reach Bajaj Finance share price to Rs.1,200 and Shriram Finance share price to Rs.950 by end FY26. Their diversified books and improving NPAs, which are at 0.9% with Bajaj Finance and 4.53% with Shriram Finance, have augmented their positive outlook despite.

Q2 FY2026 Financial Comparison: Both Shriram Finance and Bajaj Finance 

Q2 FY2026 results are reporting robust growth for both Bajaj Finance and Shriram Finance, but Bajaj Finance maintains a clear lead in scale, profitability, and market valuation. Bajaj’s higher premium reflects stronger earnings momentum and superior return metrics, while Shriram offers relatively attractive valuations with healthy operating performance.

Market Position and Valuation

Bajaj Finance, with a CMP of Rs.1,017.3 and P/E of 34.59, indicates that the market will pay up a good premium for its earnings and growth visibility. On the other hand, Shriram Finance carries a far lower valuation multiple with a CMP of Rs.848 and P/E of 18.21, indicating value appeal but also the perception of higher risk in the stock or slower growth compared to Bajaj Finance. 

In market-cap figures, Bajaj Finance commands Rs.6,33,013.08 crore against Rs.1,59,539.51 crore commanded by Shriram, making Bajaj close to four times as large. This scale advantage typically translates into better access to funds, superior brand recall, and higher bargaining power with both partners and customers.

Profitability and Capital Efficiency

Thus, on the capital efficiency aspect, Bajaj Finance edges out Shriram Finance with an ROCE of 11.35% versus 10.95%. While it has come across as a relatively modest differential in these numbers, it is very meaningful in the context of large balance sheets and tight margins typical of lending businesses. At a higher ROCE, that would imply that Bajaj generates marginally superior returns from its deployed capital, supported by its diversified retail-centric portfolio and better pricing power.

 To investors, this marginally higher ROCE, combined with a premium P/E, would reinforce positioning Bajaj as a high-quality compounder stock, while Shriram presents a more modest but efficient capital deployment profile.

Revenue Growth and Operating Performance

On topline performance, Bajaj Finance has reported Q2 FY26 sales of Rs.20,178.9 crore, significantly higher than Shriram Finance's Rs.11,912.44 crore, reflecting Bajaj's wider product suite and deeper retail penetration. However, Quarter Sales Var % is almost identical at 18.06% for Bajaj and 18.07% for Shriram, indicating that both companies grow revenue at almost the same pace on a percentage basis. However, Bajaj's Quarter Profit Var % of 21.89% outpaces Shriram's 12.22%, which brings out Bajaj's better operating leverage and cost control, which converts revenue growth more effectively into profit growth. This is one of the big reasons why there's such a valuation gap between the two.

Operating Profit and EBITDA

On an operational basis, Bajaj Finance again leads the way, with OP for the quarter at Rs.13,872.31 crore versus Shriram's Rs.8,803.4 crore. EBITDA Quarter values are almost identical to OP-Rs.13,877.47 crore for Bajaj and Rs.8,812.29 crore for Shriram-suggesting there are limited non-operating adjustments at the EBITDA level. 

A very significant difference in EBITDA on an absolute value reflects Bajaj's larger scale and higher core profitability. For Shriram, while the absolute value of EBITDA is lower, which in itself is not a negative, its lower valuation compared to that makes it a "value plus growth" story rather than a pure premium growth play like Bajaj. 

Depreciation, EBIT and Pre-Tax Profits 

Depreciation for Bajaj Finance during Q2 FY26 was Rs.258.06 crore, higher than Shriram Finance's Rs.174.5 crore, consistent with Bajaj's greater asset base and investments in technology and infrastructure. Even after depreciation, Bajaj’s EBIT Qtr value is Rs.13,619.41 crore, well over Shriram’s Rs.8,637.79 crore, confirming its stronger earnings engine at the operating level. 

Moving further down the income statement, Bajaj reported PBT of Rs.6,608.13 crore, more than twice as high as Shriram's Rs.3,112.91 crore. That sizable PBT gap reflects both scale and margin advantages; Bajaj's diversified loan book and ability to cross-sell help keep spreads and fee income healthier. 

Net Profit, PAT and Earnings Quality 

Net profit numbers are a dead giveaway of Bajaj Finance's lead: NP Quarter Rs. are Rs.4,947.76 crore against Shriram's Rs.2,314.16 crore; PAT Quarter is Rs.4,875.36 crore for Bajaj compared with Rs.2,314.22 crore for Shriram-again indicating Bajaj's superior earnings power. 

With broadly comparable sales growth, Bajaj nearly doubles Shriram's profitability. This would indicate superior credit cost management, higher net interest margins, and better cost structures. Shriram, though, remains a solidly profitable player with a strong presence in commercial vehicles and rural segments, the risk-adjusted earnings profile is perceived to be slightly inferior, contributing to its lower P/E. 

Equity Base and Leverage Implications 

Bajaj Finance's equity capital for the quarter is Rs.621.51 crore, higher than Shriram Finance's Rs.376.2 crore. A larger equity base, together with substantially higher profits, supports stronger net worth and cushions against credit shocks. 

While the leverage ratios do not directly appear from the provided data, Bajaj's higher equity and market cap imply greater ability to raise capital at favorable terms, reinforcing growth potential. Shriram's equity size is smaller than Bajaj's, which is indicative of a more focused franchise but potentially limits flexibility in aggressively scaling up without periodic capital raises. 

Overall Comparative View 

In Q2 FY2026, Bajaj Finance is clearly ahead of Shriram Finance in scale, profit growth, operating margins, and capital efficiency. Its richer valuation is also justified by rewarding investors with its consistent earnings compounding and robust risk management. Nevertheless, Shriram Finance is a strong player for steady sales growth, respectable profitability, and lower valuation, which can suit investors seeking value exposure to the NBFC space. Growth-oriented investors may find Bajaj Finance better positioned, while value investors may appreciate the relatively cheaper stock with solid fundamental performance offered by Shriram Finance.

Key driving factors in the NBFC industry in 2026:

• This has included the rapid expansion of retail credit, in particular unsecured personal loans, consumer durable finance, and MSME lending across tier-2/3 cities.
• Deepening of digital infrastructure, e-KYC, account aggregators, and AI-based underwriting contribute to lower acquisition costs and turnaround time.
• Collaboration with the fintech’s and banks by co-lending and revenue-sharing models, enabling NBFCs to grow without overleveraging their balance sheet.
• More formalization of the economy, the GST data trails, and digitalization of payments facilitate better visibility of borrowers and their credit assessment.
• Regulatory focus on risk-based supervision and capital buffers, compelling stronger NBFCs to steal market share from weaker players.
• Diversified funding via bonds, securitization, and alternative investment funds, reducing reliance on bank loans.
• Government schemes and priority sector incentives, which channel credit to housing, agriculture, and small businesses through NBFCs.
• Increasing demand for vehicle finance, affordable housing loans, and gold loans, driven by increasing disposable incomes and rural recovery.

Key risks and challenges factors in the NBFC industry in 2026:

• Risks and challenges for NBFCs are threefold in 2026: on funding, regulation, and asset quality. These will squeeze the margin and valuations, even if credit growth remains healthy.
• A rise in funding costs if liquidity tightens or if risk premia rise, compresses spreads and weakens profitability.
• Asset–liability mismatches, especially for NBFCs borrowing short term and lending long term, which can create rollover and interest-rate risk.
• Quality deterioration in the asset portfolio of unsecured retail books, MSME, and vehicle finance during phases of economic slowdown or localized stress.
• Much tighter regulatory oversight on capital, provisioning, and governance-all of which increases compliance costs and constrains aggressive growth models.
• There is competitive pressure from banks, fintech’s, and large NBFCs that has led to yield compression and increased customer acquisition costs.
• Industry, geographical, or customer segment concentrations that magnify the effects of cyclic contractions.
• Cyber risks and technology risks, since NBFCs are increasingly underwriting and collecting data electronically, leading to data breaches and system outages. Funding access risk for smaller or lower-rated NBFCs, in case market sentiment turns and thereby constrains growth or refinancing.

Conclusion

The Indian NBFC sector in 2026 finds itself at a critical juncture, marked by solid credit growth not to mention increased regulatory sentiments and funding woes. In this evolving context, major players such as Bajaj Finance and Shriram Finance have become primary indicators, with investors tracking Bajaj Finance share price and Shriram Finance share price more frequently than ever before.

With increasing digitalization and increased risk sensitization in regulations, sound and diversified NBFC companies will be poised to increase their market share, with weak balance sheets potentially struggling in this tough competitive environment. 

To this end, investors will have to keep a watchful eye on asset quality indicators, return on ratio indicators, and market indicators such as asset valuation ranges, in addition to observing trends in the Bajaj finance share price history and shifts in Shriram Finance stock price trends.

Tap into India’s NBFC boom with Enrich Money—your gateway to data-driven insights on Bajaj Finance, Shriram Finance, and high-growth opportunities in the 2025 credit upcycle.

Frequently Asked Questions

Is the NBFC sector an attractive investment option in 2026?

Yes, but it remains an attractive investment option for long-term investors, provided they invest in well-funded NBFC companies with diversified portfolios and a record of profitability.

What is the significance of Bajaj Finance and Shriram Finance in the NBFC segment?

They are major benchmarks, and stock price movements in Bajaj Finance and Shriram Finance share price today most times indicate a change in sentiment towards the whole NBFC sector.

Which are the factors affecting Shriram finance share price NSE? 

Trends in asset quality, demand in rural and CV segments, cost of funds, and earnings growth are mainly responsible for the performance of Shriram Finance share price on NSE. 

What is an investor supposed to make of a Shriram and Bajaj finance share price target 2030  in light of their share prices in the present time 

Short-term actions such as Bajaj finance share price target tomorrow are affected by quarterly performance, whereas 2030 plans are based on AUM growth, NPAs, and digital implementation. 

Can closing differences in stock valuations between these two stocks? 

Yes, if EPS growth & asset quality at Shriram improves faster than expected, then the Shriram Finance share price targets & valuations may see a re-rate towards peers such as Bajaj Finance share price.

Disclaimer:  This blog is dedicated exclusively for educational purposes. Please note that the securities and investments mentioned here are provided for informative purposes only and should not be construed as recommendations. Kindly ensure thorough research prior to making any investment decisions. Participation in the securities market carries inherent risks, and it's important to carefully review all associated documents before committing to investments. Please be aware that the attainment of investment objectives is not guaranteed. It's important to note that the past performance of securities and instruments does not reliably predict future performance.