AUM grew steady at 24% YoY to Rs 4,622.5bn. While festive season spend saw a strong uptick of 29%, BAF has lowered its overall growth guidance to 22% - 23% in FY26 due to cutdown in the MSME portfolio. While the company is seeing strong traction in new verticals (Cars, Gold, MFI) and new customer addition, we revise our growth outlook to 23%/ 24% for FY26/ FY27E. Expect FY26 NIM to remain stable aided by a lower cost of borrowing. Credit cost remained elevated in the quarter (~2%) on account of continued stress in the captive auto/ MSME portfolio. While commentary indicated a healthy trend in earlystage delinquencies, we remain wary and build a higher credit cost of 2% for FY26E.
OutlookWe cut our FY26/FY27E estimates by 4%/5% and assign a multiple of 4.2x on Sep’27 ABV with a TP of Rs 1,030. Maintain HOLD.
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