Bajaj Finance Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

Bajaj Finance has grown its loan book and profit every year, but the cash to support that profit has not appeared in six years. Operating cash flow was a negative ₹65,790 crore in FY2026 alone, and cumulative free cash outflow over four years exceeds ₹250,000 crore. The company funds itself through external borrowings of ₹435,112 crore, while paying dividends from profits that never convert to cash. Four unprovided tax demands now carry interest above ₹2,000 crore, and the regulator has intervened three times in four years.

Key findings

  1. Operating cash flow has been deeply negative for six straight years Major - Consolidated net cash from operations was negative ₹65,790 crore in FY2026 and has been negative every year since FY2021, while profit after tax rose from ₹4,420 crore to ₹19,332 crore over the same period. The CFO/PAT ratio touched -5.27x in FY2022 and stood at -3.40x in FY2026, meaning reported profit is entirely disconnected from cash generation. Free cash flow was negative ₹66,285 crore in FY2026, and the company carried consolidated borrowings of ₹435,112 crore with a debt-to-equity ratio of 3.82x.
  2. Four indirect-tax demands total ₹1,391 crore in principal, with interest now above ₹2,000 crore, and no provision is made Major - A service tax demand of ₹644.65 crore plus penalty of ₹198.95 crore, dating to an order of 31 March 2017, carried interest of ₹1,174.32 crore as at 31 March 2026; the appeal has been pending before CESTAT Mumbai since 6 July 2017. A GST demand of ₹341.29 crore plus an equal penalty, ordered on 21 January 2025, carried interest of ₹253.64 crore as at 31 March 2026. The company treats all four demands as not tenable based on legal advice and has made no provision.
  3. RBI suspended two digital lending products and levied penalties in three separate actions; IRDAI added a ₹2 crore penalty Major - RBI directed the company on 15 November 2023 to stop sanction and disbursal of loans under ‘eCOM’ and ‘Insta EMI Card’ for non-issuance of Key Fact Statements, lifting the restriction only on 2 May 2024. RBI also imposed a penalty of ₹2.50 crore on 5 January 2021 for non-compliance with outsourcing and fair-practice norms, and ₹8.50 lakh on 28 September 2023 for delayed fraud reporting. IRDAI levied an aggregate penalty of ₹2 crore on 15 July 2024 for deficiencies in commission reconciliation and customer documentation.
  4. Intra-group lending and promoter-linked funding form a dense web, with a proposed BHFL transaction ceiling of ₹18,152 crore Major - The company seeks shareholder approval for related-party transactions with subsidiary Bajaj Housing Finance Ltd. aggregating up to ₹18,152 crore, representing 162.79% of BHFL’s FY2026 standalone turnover. Standalone loans and receivables from related parties swung from nil in FY2023 to ₹555.28 crore in FY2025 before falling to ₹24.69 crore in FY2026. The company also accepted inter-corporate deposits of ₹285 crore from Bajaj Electricals Ltd and ₹100 crore from Weaver Services Pvt. Ltd during FY2026.
  5. Penal, bounce, and foreclosure charges are recognised only on realisation Minor - Delayed payment interest, bounce charges, and foreclosure charges are recognised on realisation rather than accrual, as disclosed in the FY2021-22 financial statements. The company transferred written-off loans of ₹1,117.45 crore for a consideration of ₹60.02 crore in FY2021-22. A captive two-wheeler and three-wheeler portfolio contributed less than 1% of AUM but accounted for 13% of GNPA in Q4 FY26.
  6. The group contains 20 unregistered Core Investment Companies, and the auditor declines to verify management’s information on them Minor - The auditor’s CARO report for FY2026 states the group has 20 unregistered CICs, up from 16 in FY2022. In FY2025 and FY2026, the auditor stated it “has not separately evaluated whether the information provided by Management is accurate and complete” regarding these entities.

What to watch

Bottom line: This is a disclosed and audited record with clean audit opinions and no finding of diversion. The risk is structural: six years of deeply negative operating cash flow mean the entire growth engine runs on external funding, while four unprovided tax demands carry interest that now exceeds annual profit. Watch the AGM vote on the BHFL transaction ceiling, the ageing tax appeals, and whether the cash-flow pattern changes as the loan book matures.