Bajaj Finance vs Cholamandalam Investment (2026): AUM, NPAs, ROE & Which Is Better?
Bajaj Finance and Cholamandalam Investment are both high-growth lenders, but the quality of an NBFC cannot be judged by the same ratios used for a cement or FMCG company.
For a lender, debt is inventory. Negative free cash flow can simply mean the loan book is expanding. Current ratio and conventional interest coverage are not useful in the way they are for manufacturers.
The real comparison is AUM growth, net interest economics, credit costs, GNPA and NNPA, return on assets, return on equity, capital adequacy, liquidity and the valuation paid for each rupee of book value.
The answer is not obvious because each lender currently wins a different part of the equation
Bajaj Finance has the cleaner credit book and much larger franchise. Cholamandalam is currently generating slightly higher ROE and much faster quarterly profit growth.
Bajaj Finance's Q1 FY2027 GNPA was just 0.96% and NNPA 0.39%.
Cholamandalam's RBI classification showed GNPA of 4.50% and NNPA of 2.95%.
That is a large asset-quality gap.
Yet Chola's Q1 PAT grew approximately 46%, its PBT return on assets improved to about 3.7%, and ROE reached roughly 21.2%.
Bajaj Finance delivered about 28% PAT growth, 4.7% annualised ROA and roughly 20.4% annualised ROE.
Bajaj therefore earns more from each rupee of assets while Chola currently produces a slightly higher return on shareholder equity through a more leveraged lending model.
Bajaj Finance vs Cholamandalam: Q1 FY2027 lender scoreboard
| Metric | Bajaj Finance | Cholamandalam Investment | Current Edge |
|---|---|---|---|
| Market capitalisation | ₹635,920 Cr | ₹153,802 Cr | Bajaj Finance |
| AUM | ₹546,944 Cr | ₹254,392 Cr | Bajaj Finance |
| AUM growth YoY | 24% | 23% | Almost tied |
| Q1 PAT | ₹6,081 Cr consolidated | ₹1,654 Cr standalone | Bajaj on scale |
| PAT growth YoY | 28% | 46% | Cholamandalam |
| ROA / PBT-ROA | ~4.7% annualised ROA | ~3.7% PBT-ROA | Definitions differ; Bajaj stronger on current return metric |
| ROE | ~20.4% | ~21.2% | Chola slightly |
| GNPA, RBI basis | 0.96% | 4.50% | Bajaj Finance |
| NNPA, RBI basis | 0.39% | 2.95% | Bajaj Finance |
| Gross Stage 3 | Not used here due disclosure-basis differences | 3.29% | See RBI NPA comparison above |
| Net Stage 3 | Not used here due disclosure-basis differences | 1.81% | See RBI NPA comparison above |
| Capital adequacy | 20.90% | 19.81% | Bajaj Finance |
| Tier-I capital | 20.01% | 14.81% | Bajaj Finance |
| P/E | 31.32x | 26.74x | Cholamandalam |
| P/B | 5.58x | 5.05x | Cholamandalam slightly |
| Bull Run ROE field | 18.05% | 19.33% | Chola |
| 5-year sales / income growth | 25.18% | 26.53% | Chola slightly |
| Promoter holding | 54.66% | 49.88% | Both promoter controlled |
| Promoter pledge | 0% | 0% | Both |
| Bull Run Score | 62.4/100 | 65.8/100 | Cholamandalam |
Why this article ignores free cash flow as a deciding metric
Bull Run's generic free-cash-flow fields are negative for both lenders, and that is not a useful reason to call either business weak.
When an NBFC raises money and lends it to customers, loan-book growth consumes cash.
A fast-growing lender can therefore report deeply negative conventional free cash flow while simultaneously creating economic value.
For the same reason, debt-to-equity looks high because borrowings are central to the business model.
The better questions are whether the company earns an adequate spread on those borrowings, controls credit losses and holds enough capital and liquidity to survive stress.
Bajaj Finance is more than twice the size of Cholamandalam by AUM
Bajaj Finance ended June 2026 with AUM of ₹546,944 crore.
That represented 24% year-on-year growth from approximately ₹441,450 crore.
The company added almost ₹37,000 crore of AUM in a single quarter.
Cholamandalam ended the same quarter with AUM of approximately ₹254,392 crore, up 23% year on year.
Chola's AUM is therefore less than half Bajaj Finance's, even though the growth rate is almost identical.
This scale matters because funding diversification, technology investment, data and cross-selling economics can improve as a lender becomes larger.
Bajaj Finance's customer machine is difficult to replicate
Bajaj Finance had approximately 124.43 million customers at June 30, 2026.
The franchise increased by about 5.1 million customers during Q1 alone.
New loans booked reached approximately 16.13 million, up 20% year on year.
This customer base allows Bajaj Finance to sell multiple products to existing borrowers rather than paying acquisition cost for every new loan relationship.
The company operates across consumer finance, personal loans, SME, commercial lending, rural finance, gold loans, mortgages and several adjacent financial products.
That breadth is one of its strongest competitive advantages.
Cholamandalam has built its moat differently
Chola's advantage is not a consumer super-app or 120-million-plus customer base. It is physical distribution and underwriting depth in productive-asset finance.
The company has approximately 1,820 branches and a particularly deep presence outside India's largest cities.
Vehicle finance remains its largest business.
Q1 FY2027 vehicle-finance AUM reached approximately ₹1.24 lakh crore, up 19% year on year.
Loan-against-property AUM reached roughly ₹54,130 crore, up 23%.
Home loans reached about ₹23,644 crore, up 22%.
SME AUM grew much faster, approximately 39%, to about ₹9,923 crore.
Gold loans have also become a new growth leg.
Chola's 46% Q1 profit growth was not just AUM growth
Cholamandalam's earnings grew almost twice as fast as its loan book because margins and credit economics improved.
Standalone total income increased approximately 22% to ₹8,933 crore.
PBT increased about 45% to ₹2,220 crore.
PAT increased about 46% to ₹1,654 crore.
Management reported net income margin around 8.2%, up from approximately 7.8% a year earlier.
Cost of funds fell toward 6.7%.
Net credit cost also improved.
This is the kind of quarter NBFC investors want to see: AUM growth, improving spread and controlled credit costs occurring together.
Bajaj Finance also delivered operating leverage
Bajaj Finance's Q1 net total income grew 22% to approximately ₹15,224 crore while PAT grew 28% to ₹6,081 crore.
Net interest income reached approximately ₹12,571 crore, up 23% year on year.
The company made additional prudent management and macroeconomic provisions during the quarter.
Despite that extra buffer, profitability improved.
Annualised ROA was around 4.7% and ROE approximately 20.4% in the Q1 investor presentation.
For a lender of Bajaj Finance's size, sustaining ROA above 4% is a significant profitability advantage.
The asset-quality gap is the most important number in the comparison
Bajaj Finance's GNPA of 0.96% is dramatically below Chola's RBI-basis GNPA of 4.50%.
Bajaj's NNPA is about 0.39%.
Chola's RBI-basis NNPA is approximately 2.95%.
There are nuances in portfolio mix and accounting definitions, but the gap is too large to dismiss as a technicality.
Bajaj Finance currently has the cleaner credit book.
That lowers the amount of future earnings potentially consumed by provisions if the economic environment weakens.
Chola's asset quality has to be understood in the context of its borrower mix
Chola finances many vehicles, small businesses and borrowers in smaller cities where credit behaviour differs from a prime consumer lending book.
Its Ind AS Gross Stage 3 ratio was approximately 3.29% and Net Stage 3 around 1.81% at June 2026.
RBI-norm GNPA was 4.50% and NNPA 2.95%.
These ratios were modestly higher than the previous-year period.
Management has historically pointed to normal first-quarter seasonality in collection behaviour.
The key question is whether asset quality improves as the year progresses without requiring materially higher credit costs.
Bajaj Finance is currently doing the opposite: NPAs are improving
Bajaj Finance's GNPA improved from 1.03% a year earlier to 0.96%.
NNPA improved from 0.50% to 0.39%.
Loan loss and provisions remained controlled even after including additional macro buffers.
This creates a particularly favourable combination: 24% AUM growth without deterioration in headline NPA ratios.
For fast-growing lenders, that combination is more valuable than growth alone.
Capital adequacy favours Bajaj Finance
Bajaj Finance reported capital adequacy of approximately 20.90%, including Tier-II capital.
Tier-I capital was about 20.01%.
Cholamandalam reported capital adequacy of approximately 19.81%.
Its Tier-I capital was around 14.81%.
Both exceed regulatory minimums.
The difference is that a much larger portion of Bajaj Finance's capital buffer is high-quality Tier-I capital.
That gives the company greater flexibility to absorb unexpected losses and continue growing risk-weighted assets.
Chola compensates with strong liquidity
Cholamandalam reported a total liquidity position of approximately ₹23,984 crore at June 2026, including undrawn sanctioned lines.
It also held substantial high-quality liquid assets for liquidity-coverage requirements.
The reported liquidity coverage ratio was approximately 193.6%.
That provides meaningful protection against short-term funding disruptions.
For NBFCs, liquidity can matter as much as profitability because the business depends on continuous access to funding markets.
Bajaj Finance has another funding advantage: a large deposit book
Bajaj Finance's deposit book stood near ₹68,500 crore at June 2026.
A diversified funding mix can reduce dependence on wholesale borrowing channels.
Bajaj Finance also has access to banks, bonds, securitisation and other institutional funding.
Its scale and credit standing help it compete for funding even when system liquidity becomes tighter.
Chola also maintains diversified borrowing sources but operates with a smaller funding franchise.
ROA and ROE tell different stories
Bajaj Finance's annualised Q1 ROA was approximately 4.7%, while Chola reported PBT-ROA of about 3.7%.
The definitions are not identical, so they should not be presented as a perfect apples-to-apples metric.
But Bajaj's asset-level profitability is clearly strong.
ROE is much closer.
Bajaj Finance reported roughly 20.4% annualised ROE.
Chola reported around 21.2%.
Chola therefore converts equity into profit very efficiently despite weaker NPA ratios, partly because its financial leverage and lending spreads differ from Bajaj's.
Why higher leverage at an NBFC is not automatically bad
Cholamandalam's regulatory debt-to-equity ratio was approximately 6.87 at June 2026.
That would look alarming in a manufacturing company.
For an NBFC, borrowing money to fund loans is the operating model.
The question is whether leverage is supported by capital adequacy, liquidity, asset quality and profitability.
Chola's capital adequacy remains near 20% and its liquidity position is strong, so the headline leverage ratio cannot be interpreted in isolation.
Which lender has the better growth history?
The five-year income-growth rates are remarkably close.
Bajaj Finance's five-year sales or income growth in Bull Run's current dataset is approximately 25.18%.
Cholamandalam is around 26.53%.
Chola's five-year profit growth is approximately 28.03%.
Bajaj Finance's current generic profit-growth field is not used here because financial-company reporting changes and share-count effects make the available generic series less useful.
The larger point is that both companies have spent years compounding their balance sheets at rates far above nominal GDP growth.
Valuation: Chola is cheaper, but not by a huge amount on book value
Cholamandalam trades at approximately 26.7x earnings compared with Bajaj Finance at about 31.3x.
The P/E discount is meaningful.
Price-to-book is closer: approximately 5.05x for Chola versus 5.58x for Bajaj Finance.
For lenders, P/B is especially useful because book value is the equity capital supporting the loan book.
A lender deserves a high P/B when it can sustainably generate high ROE with low credit losses.
Bajaj's cleaner asset quality helps justify some of its premium.
Chola's higher current ROE and faster PAT growth argue that its discount should not automatically be large.
The stock market currently likes both lenders
| Market Metric | Bajaj Finance | Cholamandalam |
|---|---|---|
| Price on 25 Aug 2026 | ₹1,087.40 | ₹1,873 |
| 1-month return | +7.37% | +8.62% |
| 3-month return | +16.78% | +18.60% |
| 6-month return | +7.35% | +7.14% |
| 1-year return | +20.71% | +24.09% |
| 52-week high | ₹1,176.40 | ₹1,952.50 |
| 52-week low | ₹787.90 | ₹1,299.40 |
| RSI (14) | 56.59 | 58.09 |
Chola has slightly outperformed over one month, three months and one year.
Both trade above their 50-day, 100-day and 200-day moving averages in Bull Run's current technical snapshot.
This reflects strong market confidence in the NBFC growth cycle, but it also means neither stock is entering the comparison after a major price correction.
Bajaj Finance's premium is really a bet on underwriting plus distribution
Scale
- ₹5.47 lakh crore AUM.
- 124.43 million customers.
- 16.13 million Q1 loan bookings.
- ₹68,500 crore deposit book.
- Large cross-sell engine.
Quality
- 0.96% GNPA.
- 0.39% NNPA.
- 20.90% capital adequacy.
- 20.01% Tier-I capital.
- ~4.7% annualised ROA.
Main risks
- P/B remains above 5.5x.
- Fast growth can eventually pressure underwriting.
- Consumer credit remains cyclical.
- AI and technology investments raise near-term operating costs.
- Regulatory changes can alter lending economics.
Cholamandalam's case is about distribution depth and profitable diversification
Growth engines
- Vehicle finance.
- Loan against property.
- Home loans.
- SME lending.
- Gold loans.
- Consumer and small-enterprise finance.
Current strengths
- AUM up 23%.
- PAT up 46%.
- ROE around 21.2%.
- NIM around 8.2%.
- Strong liquidity.
- Lower P/E than Bajaj Finance.
Main risks
- GNPA materially above Bajaj Finance.
- NNPA materially above Bajaj Finance.
- Tier-I capital below Bajaj Finance.
- Vehicle finance is cyclical.
- Rapid branch expansion can increase operating costs.
- High leverage amplifies credit-cycle mistakes.
Bajaj Finance vs Cholamandalam: which lender wins each category?
AUM scale: Bajaj Finance.
AUM growth: Almost tied.
Current PAT growth: Cholamandalam.
Customer franchise: Bajaj Finance.
GNPA: Bajaj Finance.
NNPA: Bajaj Finance.
Capital adequacy: Bajaj Finance.
Tier-I capital: Bajaj Finance.
Current ROE: Cholamandalam slightly.
Asset-level profitability: Bajaj Finance on current disclosed return metric.
P/E valuation: Cholamandalam.
P/B valuation: Cholamandalam slightly.
Funding diversification: Bajaj Finance.
Vehicle-finance depth: Cholamandalam.
Current one-year stock performance: Cholamandalam slightly.
Bull Run Score: Cholamandalam.
Bajaj Finance vs Cholamandalam FAQs
Which NBFC is bigger?
Bajaj Finance. Q1 FY2027 AUM was approximately ₹5.47 lakh crore versus Cholamandalam at about ₹2.54 lakh crore.
Which is growing AUM faster?
The difference is minimal. Bajaj Finance grew AUM about 24% year on year and Cholamandalam about 23%.
Which has better asset quality?
Bajaj Finance by a wide margin on current headline NPA ratios, with GNPA of 0.96% and NNPA of 0.39%.
Which has higher ROE?
Cholamandalam reported roughly 21.2% Q1 ROE compared with Bajaj Finance at about 20.4% annualised.
Which has better capital adequacy?
Bajaj Finance, at approximately 20.90% versus Cholamandalam at about 19.81%. Bajaj's Tier-I ratio is also materially higher.
Which stock is cheaper?
Cholamandalam currently trades at the lower P/E and slightly lower P/B.
Why should free cash flow not be used for this comparison?
NBFCs borrow money and deploy it into loans, so lending growth itself consumes cash. Conventional free cash flow can therefore be negative even when an NBFC is growing profitably.
Which has performed better over one year?
Cholamandalam slightly, with a return of approximately 24.1% in Bull Run's August 25 snapshot versus Bajaj Finance at about 20.7%.
Research sources
- Bull Run current market, ownership and valuation data
- Bull Run Smart Screeners
- Bajaj Finance investor relations and financial results
- Bajaj Finance annual reports
- Bajaj Finance FY2026 digital annual report
- Cholamandalam official financial results
- Cholamandalam Q1 FY2027 earnings call materials
- Cholamandalam official Q1 FY2027 press release
Disclaimer
This comparison is educational and informational only. NBFCs should be assessed using lender-specific metrics such as AUM, asset quality, capital adequacy, funding, liquidity, credit cost, ROA and ROE rather than generic industrial ratios. NPA and Stage 3 definitions can also differ by regulatory and accounting basis. Financial metrics, lending standards, funding costs and market prices change over time. Nothing here recommends buying, selling or holding Bajaj Finance, Cholamandalam Investment or any other security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.