Bajaj Finance’s robust September quarter results ignited investor enthusiasm, propelling its shares 6 percent higher and securing the top spot on the Nifty 50 charts. Brokerages have responded positively, revising target prices upward with some projecting a potential upside of up to 41 percent from the day's high. Strong tech initiatives, comfortable capital position, and attractive valuations are some of the re-rating drivers going ahead, said analysts.
Phillip Capital reiterated a 'buy' call on Bajaj Finance and put out target price at Rs 10,000 per share. The firm expressed confidence in Bajaj Finance’s growth trajectory, projecting over 30 percent annual growth in FY25, FY26, and FY27. Analysts are particularly upbeat about the company's new tech initiatives, which they believe will enhance customer loyalty and accelerate growth.
HDFC Securities also maintained a bullish outlook, setting a target price of Rs 8,600 per share. While acknowledging near-term concerns around asset quality, the brokerage expects Bajaj Finance to achieve a 23 percent compound annual growth rate (CAGR) in assets under management (AUM) over the medium term. The addition of new business segments, coupled with a steady focus on profitability, positions the lender for sustained momentum.
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Jefferies joined the bullish chorus, assigning a 'buy' rating with a target of Rs 8,400 per share. The firm highlighted that valuations remain attractive, with Bajaj Finance trading at 3.8x FY26 price-to-book (PB) ratio and 20x price-to-earnings (PE) ratio—levels it considers reasonable for the growth potential on offer.
Bajaj Finance reported a mixed bag of results for Q2FY25. While loan book growth surged 29 percent year-over-year, and operational efficiency improved, elevated credit costs dampened some of the optimism.
Asset quality showed signs of strain, with higher forward flow rates across several segments, prompting the management to increase FY25 credit cost guidance by 20-30 basis points.
In response to the asset quality challenges, the management has shifted its focus towards tightening risk controls. However, the company reassured investors that borrowing costs are likely to have peaked, hinting at stable margins in the coming quarters. Bajaj Finance is also optimistic about delivering 26-28 percent growth in FY25, driven by newly launched secured lending businesses.
Additionally, the lender expects a 10-15 basis point expansion in net interest margins (NIM) during the second half of FY25, aided by a 15-20 basis point reduction in the cost of funds.
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