Bajaj Finance, Bajaj Finserv shares crack 6% following Q4 earnings show; should you buy, sell, or hold?

Brokerages remain divided on near-term outlook due to margin and credit cost pressures.

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The Bajaj twins, Bajaj Finance Ltd. and Bajaj Finserv Ltd., emerged as the top losers on the Nifty 50 index in trade on April 30, sinking around six percent after reporting their respective earnings show for the fourth fiscal quarter.

At 9.43 am, Bajaj Finance shares were quoting Rs Rs 8,668 per share, lower by 4.67 percent, while Bajaj Finserv's stock price sank to Rs 1,945.10, down 5.89 percent on the NSE.

Bajaj Finserv announced a 14 percent increase in its consolidated net profit, which reached Rs 2,417 crore for the fourth quarter ending March 2025. This marks an increase from the net profit of Rs 2,119 crore reported during the same January-March period of the previous fiscal year.

Bajaj Finance reported a 17 percent  jump in consolidated net profit at Rs 4,480 crore for the quarter ended March 31, 2025. It reported consolidated net profit of Rs 3,825 crore in the year-ago period. Its consolidated revenue rose 17 percent to Rs 18,457 crore in Q4FY25 as against Rs 14,927 crore in Q4FY24.

However, Bajaj Finance's profit was optically supported by a Rs 290 crore tax reversal during the quarter. The firm's net interest margin (NIM) contracted ~10 bps QoQ to ~9.65 percent.

Going ahead, the management appears optimistic about the performance in FY26. There are a number of levers working in favor of offsetting certain headwinds, such as declining fee income on account of running off the co-branded card business. Further, the management guided that margins will remain stable in FY26, supported by an expected 10-15 bps decline in the cost of borrowings (CoB).

Should you buy, sell, or hold?

Domestic brokerage Emkay Global said, "Bajaj Finance reported a satisfactory quarter, in terms of AUM growth, customer acquisition, operating efficiencies, and pre-provisioning profit. Elevated credit cost resulted in subdued profit growth." It maintained its 'add' rating, with a target price of Rs 9,200 per share.

"Newer product expansion and continued growth in old products, along with a ~14-16mn customer acquisition, should result in ~25 percent AUM growth; RoE should be ~20 percent despite the excess capital position," said Emkay.

Jefferies retained a 'buy' rating with a target price of Rs 10,440, noting that Bajaj Finance's profit was largely in line with expectations. The new CEO reset expectations slightly lower, trimming near-term growth forecasts, but the brokerage said the outlook  was credible for a company of its scale.

HSBC also maintained its 'buy' call, with an increased target price of Rs 10,800. The broking firm seesmBajaj Finance as an earnings inflection story likely to unfold between FY26 and FY28. It projects a 25 percent CAGR in earnings over FY25–28 and expects NIMs to remain flat in FY26 compared to FY25.

"We see limited upside catalysts given the rich valuations and lack of near-term re-rating triggers.
Consequently, we reiterate our Neutral rating on the stock with a target price of Rs 10,000 per share," said Motilal Oswal.

On the other hand, Citi downgraded Bajaj Finance to 'Neutral' after significant outperformance versus the Bank Nifty this year and over the past 12 months. It also cut the target price to Rs 9,830 from Rs 10,200. Citi cited a 2.3 percent credit cost, including extra provisions from model changes, and a 9 bps drop in NIMs that led to a core earnings miss.

Today's fall can attributed to the recent surge in the stock price over the past four months, which led to a jump in valuation as well. This suggested that much of the optimism was already priced in, Ajit Mishra, Senior Vice President at Religare Broking stated.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.