Bajaj Group's Bajaj Finance shares sank six percent in trade on Friday, July 25, after India's leading non-banking financial company reported its earnings show for the quarter ended June 30, 2025.
Bajaj Finance reported a 22 percent rise in consolidated net profit to Rs 4,765 crore for the quarter ended June 30, 2025, driven by strong loan growth. This is up from Rs 3,912 crore in the same quarter last year.
Its consolidated revenue for the quarter also grew 21 percent, coming in at Rs 19,524 crore compared to Rs 16,100 crore in Q1FY25.
Number of new loans booked in Q1FY26 was 13.49 million as against 10.97 million in Q1 FY25, a growth of 23 percent, said the company.
Net interest income increased by 22 percent in Q1FY26 to Rs 10,227 crore from Rs 8,365 crore in Q1FY25. Net total income increased by 21 percent in Q1FY26 to Rs 12,610 crore from Rs 10,418 crore in Q1FY25.
Further, credit costs were notably higher in the 2W/3W and MSME segments, with stress in the MSME portfolio becoming evident since February 25. Given these headwinds, the company expects growth in both segments to moderate significantly from Q2 onwards.
At 9.18 am, shares of Bajaj Finance were quoting Rs 901.8, down by 6 percent on the NSE.
Should you buy, sell, or hold shares of Bajaj Finance?
JPMorgan downgraded its rating on Bajaj Finance to 'neutral', from 'overweight' earlier. The brokerage noted that while Bajaj Finance remains a top-tier NBFC, the unexcepted MSME stress and weak 2W/3W loans may lead to earnings downgrades.
"While credit costs rose sequentially primarily due to stress in the MSME and Auto Loan segments, asset quality witnessed only a marginal deterioration. Looking ahead, growth in the MSME segment is expected to remain subdued in FY26 due to ongoing macro headwinds," said Motilal Oswal. The brokerage maintained its 'neutral' tag, with a price target of Rs 1,000 per share.
Bernstein reaffirmed its 'underperform' rating on Bajaj Finance with a target price of Rs 640 per share as redit costs remained elevated at 202 basis points, higher than the company's guidance of 185–195 bps. Bernstein flagged concerns over future profitability, citing pressure from declining loan spreads.
UBS issued a 'sell' call on Bajaj Finance with a target price of Rs 750 per share. The brokerage observed rising stress in the MSME segment. While Q1 profit came in ahead of estimates, it was mainly due to higher other income. The Swiss brokerage added there is no near-term certainty around leadership, with a successor expected to be named closer to 2028.
Macquarie has also given an 'underperform' tag with a target price of Rs 800 per share. The brokerage said Q1 profit was in line with expectations, with lower provisioning offset by weaker other income.
The international brokerage said that the stock is not factoring in potential cuts to growth guidance or higher credit costs. At 4.4x FY27 estimated price-to-book, the current valuation already assumes 24–25 percent AUM growth.
Motilal Oswal said, "Going forward, sustained traction in non-linked products and further improvement in rider attachment are expected to drive VNB margin expansion. Continued investments in agency and digital channels are expected to drive overall growth, supported by a
recovery in the bancassurance channel." The brokerage kept its 'buy' tag intact, with a price target of Rs 2,140 per share.
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