Why Shriram Finance is growing profits faster than Bajaj—yet trades 54% cheaper

Let’s see how the two squared off in the June 2026 quarter.

Q1 Loan Growth: Retail and CV Demand Defy the Slack Season

The two NBFCs reported solid growth in loans in the quarter, and once again they were driven by higher margin retail loans like gold loans, passenger vehicle loans and consumer loans.

Bajaj Finance declared its quarterly results before the close of Thursday trade, and its standalone loan book grew 23.1% y-o-y to Rs 4 lakh crore. The NBFC has highlighted strong growth in higher margin loans- 112% y-o-y growth in gold loans to Rs 21,152 crore, car loans grew 28% y-o-y to Rs 15,995 crore, CV and tractor loans grew 102% y-o-y to Rs 4,355 crore.  

Earlier, Shriram Finance highlighted its loan book grew 15.3% y-o-y to Rs 3.13 lakh crore with CV loans growing 19.4% y-o-y to Rs 1.47 lakh crore, gold loans  growing 45% y-o-y to Rs 7,513.7 crore, and passenger vehicles  grew 21.2% to Rs 68,650 crore.

Bajaj Finance v/s Shriram Finance (June 2026 – standalone basis)

NBFC	Growth in loans (% change y-o-y)	Net Interest Income (% change y-o-y)
Bajaj Finance	23.1%	24%
Shriram Finance	15.3%	33.5%

The June quarter is typically a ‘slack’ season for credit, with individuals, small and large companies still evaluating their financial objectives for the new financial year. Also, it is a quarter where a large number of families are on holiday and demand for credit is typically slack. The double-digit loan growth recorded by these two NBFCs is commendable.

The NII Battle: How Shriram’s Commercial Exposure Edged Out Bajaj

Another key operational parameter that is closely tracked by investors is net interest income (NII).

Bajaj Finance has not given its NIM – it has highlighted a 24% y-o-y growth in its standalone net interest income (NII) to Rs 11,495 crore. 

For Shriram Finance, its standalone NII grew nearly 33.5% y-o-y to Rs 7,705 crore and easily grew faster than its bigger rival. Shriram Finance has a large exposure to commercial loans, nearly 46.9% of its total loans, and loans in this segment have much higher interest rates, given the risk profile of borrowers.

In addition, it has strong focus on higher margin gold loans, passenger vehicles and farm equipment.

As a result, Shriram Finance was able to grow its NII faster than larger rival. Its NIM was also 9.04% in the quarter as against 8.11% a year earlier.

Asset Quality: High-Margin Loans Offset Provisioning Hikes

Bajaj Finance’s impairment on financial instruments was Rs 1,976.9 crore, a growth of 2.4 % y-o-y.  The NBFC has highlighted a prudent management and macro-economic provisions of Rs 296 crore in the first quarter of FY27.

Its net NPA (stage 3 asset. net) ratio was 0.49% as against 0.63% a year earlier.

And strong growth in high-margin loans helped its standalone net profit rise 29.3% y-o-y to Rs 5,345.5 crore in the quarter under review.

Meanwhile, Shriram Finance’s net NPA ratio was 2.33% as against 2.57% a year earlier. However, its impairment on financial instruments was Rs 1,463.3 crore as compared to Rs 1,285.7 crore a year earlier.

Nevertheless, strong loan growth and higher NIMs helped Shriram Finance’s standalone net profit grow 59.8% y-o-y to Rs 3,444.6 crore in the June 2026 quarter

Return on Equity (RoE) – The Efficiency Test

Shriram Finance has a standalone RoE of 16.4% according to Screener.in. Bajaj Finance in its results presentation has highlighted an annualized consolidated RoE of 20.4% 

Foreign Backing and Macro Headwinds

Investors will continue to closely monitor the role of Japan-based MUFG in the growth strategy of Shriram Finance over the next few quarters. MUFG held a 20.1% stake in Shriram Finance at the end of the June 2026 quarter.

Of equal importance, investors will be monitoring the local impact of the Middle East crisis and whether there is any impact on operational parameters of these two NBFCs going forward.

The 54% Valuation Gap: Unpacking the Price-to-Book Disconnect

Bajaj Finance was broadly flat at Rs 1,056 on Thursday, and the stock had reached its 52-week high of Rs 1,102.5 on 23 October 2025. Bajaj Finance trades on the preferred valuation matrix – price-to-(standalone) book value of nearly 6.4 times.

Over the past 5 years, the stock has traded between 5.1 times and 13.1 times price-to-(standalone) book value.

Meanwhile, Shriram Finance declined 1.7% to Rs 1,027 on Thursday, and the stock reached its 52-week high of Rs 1,108 on 26 February 2026.

Shriram Finance trades at 2.9 times price-to-(standalone) book value. Over the past 5 years, it has traded between 1.1 times and 3.5 times price-to-(standalone) book value.

Valuations of Shriram Finance v/s Bajaj Finance

NBFC	Price-to-(standalone) book value
Bajaj Finance	6.4 times
Shriram Finance	2.9 times

And HDFC Bank, the largest private sector bank, trades at 2 times price-to- (standalone) book value.

Investors could put Shriram Finance on their watch list for 2026, given an aggressive growth plan with its Japanese partner. Investors will be closely monitoring the growth in the retail loans and other operational parameters of Shriram Finance over the next few quarters.

For Shriram Finance, to effectively catch up with its much larger rival, Bajaj Finance, it will need to balance strong growth in loans along with a high-quality loan book.

Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article. 

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