It is the face-off in the NBFC sector that is attracting increased attention of investors on Dalal Street – on one side is the of the ring is the Goliath, Bajaj Finance, and on the other side of the ring is Shriram Finance.
Let’s see how the two squared off in the most recent quarter.
March 2026 quarter – Strong core operational performance
Performance in the March 2026 quarter
| NBFC | Growth in loans (% change y-o-y) | Net Interest Margin (%) |
| Bajaj Finance | 22% y-o-y | 20.3% growth instandalone net interest income |
| Shriram Finance | 14.8% y-o-y | 8.6% |
The two NBFCs reported solid growth in loans in the March 2026 quarter, and once again they were driven by higher margin retail loans like gold loans and passenger vehicle loans.
Bajaj Finance declared its results after the close of Wednesday trade, and its loan book grew a strong 22% y-o-y to Rs 5.09 lakh crore in the March 2026 quarter. It has highlighted strong growth in gold loans, CV and tractor finance along with car loans.
Earlier, Shriram Finance reported a 14.8% growth in its loan portfolio to Rs 3.02 lakh crore in the March 2026 quarter, and that was thanks to strong growth in loans for commercial vehicles, passenger vehicles and gold loans.
For context, HDFC Bank, the largest private sector bank, recorded credit growth of 12.1% y-o-y to Rs 29.37 lakh crore in the March 2026 quarter.
Another key operational parameter that is closely tracked by investors is net interest margin (NIM).
Bajaj Finance has not given its NIM – it has highlighted a 20.3% y-o-y growth in its standalone net interest income to Rs 10,716 crore in Q4FY26.
For Shriram Finance, its NIM was 8.6% in the March 2026 as against 8.25% a year earlier. Its strong focus on higher margin gold loans and commercial and passenger vehicles has helped to deal effectively with the NIM pressure in Q4FY26, at a time when RBI is attempting to boost lending in the broader banking system via cheaper credit.
For HDFC Bank, it’s NIM was 3.53% on interest earning assets in the March 2026 quarter as against 3.7% a year earlier.
Strong Asset quality helps profit growth in Q4FY26
Bajaj Finance’s impairment on financial instruments was Rs 1,952.7 crore in the March 2026 quarter, a fall of 9% y-o-y. The Pune-based NBFC has highlighted it has made changes in the way it provides for impairment on financial instruments in the March 2026 quarter, and resulting fall in this overhead.
Its net NPA (stage 3 asset. net) ratio was 0.52% for 0.52% for FY26 as against 0.56% for FY25.
Strong growth in loans coupled with a 45.4% y-o-y jump in fees and commission income helped Bajaj Finance to offset higher operating costs like employee expenses in the March 2026 quarter. Its standalone net profit rose 22.8% y-o-y to Rs 4,839.5 crore in the quarter under review.
Meanwhile, Shriram Finance, its net stage 3, it was 2.33% in the March 2026 quarter as against 2.64% a year earlier. Also, its impairment on financial instruments declined nearly 10% y-o-y to Rs 1,409.7 crore in the March 2026 quarter.
Strong loan growth and decline in provisions helped its standalone net profit rise 40.9% y-o-y to Rs 3,013.6 crore in the March 2026 quarter.
For HDFC Bank, its % of net NPAs to net advances was 0.38% in the March 2026 quarter as against 0.43% a year earlier.
Also, HDFC Bank’s standalone net profit rose 9% y-o-y to Rs 19,221 crore in the March 2026 quarter.
The Efficiency Test
Shriram Finance has a standalone ROE of 16.4% according to Screener.in. Bajaj Finance in its results presentation has highlighted a consolidated annualised ROE of 18.1% (post the company changed its presentation of recoveries).
Growth outlook
Shriram Finance plans to raise funds via issuance of debt securities, and further details are awaited.
Investors will be closely watching the two leading NBFCs and their ability to sustain the loan growth momentum.
In its investor presentation, Shriram Finance has highlighted on 8 April, 2026, it has completed a preferential allotment of 471,121,055 shares to Japan-based MUFG Bank. As a result, MUFG Bank holds a 20% stake in Shriram Finance on a fully diluted basis.
Investors will also be closely monitoring the role of Japan-based MUFG in the growth strategy of Shriram Finance over the next few quarters.
Of equal importance, investors will be monitoring the local impact of the Middle East crisis and whether there is any rise in the NPA levels of these two NBFCs.
The Valuation Gap: Why Shriram Trades at a 50% Discount to Bajaj
Bajaj Finance v/s Shriram Finance valuation matrix
| NBFC | Price to (standalone) book value (x) |
| Bajaj Finance | 5.7 times |
| Shriram Finance | 2.7 times |
Bajaj Finance gained 1% to Rs 939 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 5.7 times.
Over the past 5 years, Bajaj Finance has traded on this valuation matrix between 5.1 times and 13.1 times.
Meanwhile, Shriram Finance ended 1.9% lower on Thursday to Rs 938.9, and the stock had reached its 52-week high of Rs 1,108 on 26 February, 2026.
Shriram Finance trades at nearly 2.7 times price to (standalone) book value. Over the past 5 years, Shriram Finance has traded on this valuation matrix between 1.1 times and 3.4 times.
Investors will also be closely monitoring the role of Japan-based MUFG Bank in the growth strategy of Shriram Finance over the next few quarters.
And HDFC Bank, the largest private sector bank, trades at 2.1 times price to (standalone) book value.
Investors could put Shriram Finance on their watch list for 2026, given an expected 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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