Bajaj Finance’s Premium Valuation Faces Leadership Headwinds

Bajaj Finance’s shares have long traded on the assumption that flawless execution can outlast any economic cycle. That faith is now being tested by a leadership gap the company thought might never open because of its meticulous planning.

The abrupt resignation of Anup Kumar Saha, the hand-picked successor to Rajeev Jain, leaves India’s largest non-bank lender scrambling at precisely the wrong time. Saha was groomed internally for eight years and lasted just four months in the top job. He is expected to take up the chief executive role at IndusInd Bank, a competitor in retail lending. The result: Jain, who had stepped back to become executive vice-chairman, will now be vice chairman and managing director.

Jain now has the unenviable task of simultaneously managing day-to-day operations, overseeing long-term strategy, and rebuilding succession planning. Jain also has to steer his company through what appears to be a turning credit cycle.

For investors, the signs are troubling. Bajaj Finance trades at a price-to-earnings ratio of around 35, compared with an industry average near 25 and more than double Shriram Finance’s multiple of about 13. Its price-to-book ratio hovers near six. Premium valuations can be justified by growth and pristine credit quality; both now look less certain.

The company’s April–June results were superficially strong. Net profit rose 21.8% year on year to ₹47.65 billion, and assets under management jumped 25% to ₹4.41 trillion. Yet credit stress is building beneath the surface. Loan losses and provisions climbed 26%, and gross non-performing assets ratio inched up to 1.03% from 0.86% a year earlier. With funding costs already close to 7.8%, there is little room for error if the economic backdrop weakens. Side ventures like Bajaj Markets, which disbursed ₹12.1 billion with unclear profitability metrics, look like expensive distractions when core leadership bandwidth is stretched thin.

Leadership churn compounds this vulnerability. Succession planning is meant to guarantee continuity; here, it has produced instability. Either Bajaj Finance underestimated the lure of external offers, or it misjudged the staying power of its own appointee. Both possibilities raise questions about the company’s succession processes and governance oversight.

Saha’s exit comes at a time when India’s retail credit boom is slowing at the edges, with delinquencies rising in unsecured personal loans. A chief executive who doubles as a crisis firefighter and long-term strategist is rarely ideal.

Bajaj Finance remains among the highest-valued financial companies in Asia, because of its deserved reputation for disciplined underwriting and rapid product innovation. Yet reputations can fray when leadership signals turn messy. The company has given itself six months to craft a new succession plan, targeting March 2028 for the next leadership transition. That amounts to a reset rather than a handover.

For now, the growth engine is intact, but investors will demand that evidence that Bajaj Finance can maintain strategic focus and operational excellence while rebuilding its leadership bench. Without that assurance, its premium multiple is set to face more and louder scrutiny from the markets.